Worldwide steel output continued its monthly decline in September, though production remains above the prior-year level and new research forecasts a strong rebound in steel demand in the near future, according to the World Steel Association.

Global crude steel production increased 0.9 percent year-over-year in September, while the capacity utilization rate among steel manufacturers rose to 74.4 percent, up slightly from a 73.3 percent rate in August, the World Steel Association (worldsteel) reported today. Total steel production for the 66 countries tracked by worldsteel was 112 million metric tons last month, down from the 113 million metric tons produced in August and 115 million metric tons in July. However, the September total remained above the 111 million metric tons produced in September 2009.

The latest production figures indicate that global steel output continues to decline on a month-to-month basis, but remains stronger than during the same period last year. In August, production nearly rebounded to its pre-crisis level, though the steel sector has yet to cross that threshold.

Steel output from China, the world’s largest steel producer, fell to 47.9 million metric tons in September, down from 51.6 million metric tons the prior month and 5.9 percent below the level for September 2009. Elsewhere in Asia, Japanese production rose to 9.2 million metric tons, up from 8.9 million in August and 11.7 percent above last year. South Korea’s production rose to 4.7 million metric tons from 4.5 million in August, and it remained 3.2 percent above the prior-year level.

In total, Asian countries have produced 663 million metric tons of crude steel so far this year, 15.5 percent more than during the same period in 2009.

In the European Union, Germany’s crude steel production totaled 3.3 million metric tons in September, down from 3.5 million in August but still 4.1 percent above the September 2009 level. Production in Italy jumped to 2.3 million metric tons from 1.1 million in August, climbing 19.8 percent above the prior-year level. In Spain, production rose to 1.4 million metric tons, up from 1.1 million in August but 1.2 percent below the same month last year.

Countries in the E.U. have produced a combined total of 130 million metric tons of steel in the first nine months of 2010, 32.8 percent more than during the same period last year.

In the United States, crude steel output decreased to 6.6 million metric tons in September, down from 6.9 million metric tons in August though still 15 percent higher than the nation’s output in September 2009. So far this year, U.S. steelmakers have produced 61 million metric tons of crude steel, nearly 50 percent more than during the same period in 2009.

Despite the month-to-month slowdown in steel production, the forecast for the steel sector is improving. After a 6.6 percent contraction in 2009, apparent steel usage is expected to increase 13.1 percent in 2010, according to worldsteel’s Short-Range Outlook. The report, released this month, estimates a 5.3 percent rise in 2011 global steel demand. Meanwhile, in the U.S. alone, steel use is forecast to climb 32.9 percent in 2010 and 9.4 percent in 2011, bringing usage up to nearly 80 percent of the 2007 level.

“This improved outlook is due to a better than expected forecast for the developed economies particularly the E.U., NAFTA, and the C.I.S. as well as the continued strong rebound in most emerging economies,” Daniel Novegil, chairman of the worldsteel Economics Committee, said in an announcement of the findings. “This suggests a steady and stable steel recovery, and our current forecast does not foresee a double dip recession as feared by some.”

Already, steel shipments are on an upswing. The American Iron and Steel Institute this week reported that U.S. steel mills saw an 11.5 percent increase in shipments in August, rising to 7.2 million net tons from 6.5 million net tons in July. The rise in August marked a 29.7 percent increase from net tons shipped in the same month in 2009. So far this year, steel mills have shipped 56 million tons of the metal, 51.4 percent more than the corresponding year-to-date total last year.

Meanwhile, steel product shipments are also strong. According to the Metals Service Center Institute this week, steel product shipments from U.S. metals service centers totaled 3.17 million tons in September, up 23.9 percent from September 2009. In the first nine months of 2010, shipments climbed to 26.8 million tons, 19.8 percent more than during the same period last year.

At the end of September, steel product inventories rose to 7.53 million tons, up slightly from 7.4 million tons in August and 30 percent above last year’s stockpiles. At current shipping rates, this represents a 2.4-month steel product supply.

“The recovery so far has been mainly driven by the inventory cycle and government stimulus packages whose effects are now fading out. But, whether consumer and corporate spending will now pick up and continue the recovery momentum is yet to be seen,” Novegil added. “Recent economic indicators are giving us mixed signals and developments in the remaining part of this year and early next year must be watched carefully.”

Earlier

Global Steel Output Close to Pre-Crisis Level

Global Steel Production Slows in July

Resources

September 2010 Crude Steel Production
World Steel Association, Oct. 21, 2010

worldsteel Short Range Outlook
World Steel Association, Oct. 4, 2010

August Steel Shipments up 11.5 Percent from July
American Iron and Steel Institute, Oct. 18, 2010

Little Change in Steel, Aluminum Shipment and Inventory Trend
Metals Service Center Institute, Oct. 18, 2010