Although output declined on a month-to-month basis, worldwide steel production nearly rebounded to its pre-crisis level in August, continuing the ongoing recovery in the metals industry, according to the World Steel Association.

Global production of crude steel increased 4.2 percent year-over-year in August, while the capacity utilization rate for steel manufacturing fell to 73.1 percent — a yearly low — from a revised 74.4 percent in July, the World Steel Association (worldsteel) reported Tuesday. Total steel production for the 66 countries tracked by worldsteel was 113 million metric tons last month, down from 115 million metric tons in July and 119 million metric tons in June, but still higher than the 108 million metric tons produced in August 2009.

The latest production figures show that steel output is nearly at the same level as in August 2008. However, after making significant monthly gains through May, steel production rates continue to decline month to month despite the continuing rebound.

“World crude steel production in August 2010 was almost at the same level as August 2008, before the impact of the global economic crisis was felt,” worldsteel explains. “However, while China, Turkey and Iran showed increased crude steel production in August 2010 compared to the same month in 2008, the U.S., Germany, Italy, Brazil and Japan are not yet back to pre-crisis production levels.”

Steel output from China, the world’s largest steel producer, fell to 51.6 million metric tons in August, down from 51.7 million metric tons in July and 1.1 percent below the total for August 2009. Elsewhere in Asia, Japanese production decreased to 8.9 million metric tons, down from 9.2 million metric tons in July, but remained 7.1 percent above the prior-year level. South Korea’s production fell from 4.8 million metric tons in July to 4.5 million metric tons in August while remaining 6.4 percent above last year.

In total, Asian countries have produced roughly 593 million metric tons of steel so far this year, 17.8 percent more than during the same period in 2009.

In the European Union, Germany’s crude steel production remained at 3.5 million metric tons in August, unchanged from July, while increasing 17.1 percent over August 2009. Production in Italy fell to 1.1 million metric tons, down from 2.2 million metric tons in July but 45.4 percent above the August 2009 level, while Spain produced 1.1 million metric tons, up 0.2 percent from the same month last year.

Combined, countries in the E.U. have produced a total of 116 million metric tons of steel in the first eight months of 2010, 37.5 percent more than during the same period last year.

In the United States, crude steel output increased to 6.9 million metric tons in August, up from 6.7 million in July and 23.7 percent above the August 2009 level. So far this year, U.S. steelmakers have produced 54.5 million metric tons, 56.4 percent more than during the same period last year.

Despite the promising increase in production, shipments from U.S. steel mills have continued to slow, signaling contracting demand for steel materials. The American Iron and Steel Institute last week reported that shipments from U.S. steel mills decreased to 6.5 million net tons in July, down 11.2 percent from the 7.3 million net tons shipped in June. However, July 2010 shipments remained 23 percent above the level for July 2009 and the year-to-date total was 55.3 percent higher than last year.

Meanwhile, shipments from metals service centers have increased. According to the Metals Service Center Institute last week, steel product shipments rose from 2.87 million tons in July to 3.2 million tons in August, marking a 25.5 percent increase over the same month in 2009. So far this year, shipments have totaled 23.7 million tons, 19.3 percent more than during the same period in 2009.

In the U.S. last month, steel service center inventories fell slightly to 7.4 million tons in August, but remained 32.4 percent larger than stockpiles in August 2009. At current shipping rates, this represents a 2.3-month steel supply.

The U.S. Geological Survey’s latest primary metals index also experienced a slight uptick in August, climbing from a revised reading of 144.6 in July to 145.5, a 0.6 percent increase. However, the index’s six-month smoothed growth rate, which tracks near-term trends, decreased from a revised 3.7 percent in July to 3.4 percent in August, which “appears to be pointing to continued slowdowns in the recovery in the U.S. metals industry in the near term.”

Part of the slowdown may be due to elevated raw materials pricing, as well as sluggish demand in industries that traditionally rely on steel and other metal products.

“Throughout the industry, profit margins are being squeezed by high raw materials costs and an inability by steelmakers to pass those costs on to customers still stung by the recession,” TheStreet.com explains. “For many steelmakers, the moribund commercial construction business has been the main culprit.”

Earlier

Global Steel Production Slows in July

Global Steel Production Up in First Half of 2010

Resources

August 2010 Crude Steel Production
World Steel Association, Sept. 21, 2010

July Steel Shipments Down 11.2 Percent from June
American Iron and Steel Institute, Sept. 16, 2010

Steel, Aluminum Shipment Growth Rate Rebounds
Metals Service Center Institute, Sept. 17, 2010

Metal Industry Indicators
U.S. Geological Survey, Sept. 17, 2010

Steel Stock Losers: Bears Continue to Emerge
by Scott Eden
TheStreet.com, Sept. 20, 2010