Global Steel Production Increases in January

February 24, 2011

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Worldwide steel output continued to rise in January, increasing both on a monthly basis and year-over-year, while shipments of steel products have also been on an upswing, according to the latest data.

Global production of crude steel increased 5.3 percent year-over-year in January, while the capacity utilization rate for steel manufacturing rose to 75.6 percent, up from a revised 73.3 percent in December but 0.4 percentage points lower than the rate in January 2010, the World Steel Association (worldsteel) reported Monday. Total steel production for the 64 countries tracked by worldsteel climbed to 119 million metric tons last month, up from 116.2 million metric tons in December and 113 million metric tons in January 2010.

The latest production data show that steel output continues to increase on a month-to-month basis and remains stronger than during the same period a year ago, boosting prospects for steady growth at the start of 2011.

"Generally, the first quarter of a calendar year is seen as strong from the demand point of view," Alok Kumar Nemani, an analyst with Nomura Financial Advisory and Securities (India) Pvt. Limited, told Moneylife. "Now, we are seeing growing demand from developed economies such as the US and European countries, and that is leading to an increase in production activities."

Steel output from China, the world's largest steel producer, rose to 52.8 million metric tons in January, up from 51.5 million metric tons in December and 0.5 percent above the total for January 2010. Elsewhere in Asia, Japanese production rose to 9.7 million metric tons, up from 9.2 million metric tons in December and 10.7 percent higher than the prior-year level. South Korea's production totaled 5.6 million metric tons last month, roughly the same as in December but 24.2 percent above the level in January 2010.

In total, Asian countries tracked by worldsteel produced 75.4 million metric tons of crude steel in January, a 3.3 percent increase over the 73 million metric tons produced in the same month last year.

In the European Union, Germany's crude steel production climbed to 3.7 million metric tons in January, up from 3.2 million metric tons in December and 4.4 percent higher than in January 2010. Production in Italy rose to 2.1 million metric tons, up from 1.9 million in December and 10.3 percent above the same month last year, while Spain produced 1.4 million metric tons, up from 1 million metric tons the previous month and 4.1 percent above the January 2010 total.

Combined, countries in the E.U. produced a total of 14.2 million metric tons of steel last month, a 4 percent increase over the 13.7 million metric tons produced in January 2010.

In the United States, crude steel output increased to 6.8 million metric tons last month, slightly up from 6.7 million metric tons in December but 9.4 percent higher than the output in January 2010.

The promising gains made in crude steel production were reflected in shipments from U.S. steel mills, signaling rising demand for steel materials. The American Iron and Steel Institute last week reported that shipments from U.S. steel mills increased to 7.1 million net tons in December, 8.6 percent more than the 6.5 million net tons shipped in November. For all of 2010, steel mill shipments climbed to 83.4 million net tons, a 38.3 percent increase over the 60.3 million net tons shipped in 2009.

Meanwhile, shipments from metals service centers have also increased. According to the Metals Service Center Institute last week, steel product shipments rose from 2.82 million tons in December to 3.42 million tons in January, marking a 32.5 percent increase over January 2010.

In the U.S. last month, steel service center inventories rose to 8 million tons, up from 7.71 million tons in December and 28.3 percent above the total for January 2010. At current shipping rates, this represents a 2.4-month supply.

The U.S. Geological Survey's latest primary metals index experienced a slight improvement in January, increasing from a revised 156.2 reading in December to 156.8 last month, a 0.4 percent increase. However, the index's six-month smoothed growth rate, which tracks near-term trends, eased from a revised 11.7 percent in December to 11.2 percent in January, indicating continued expansion but at a slower pace.

January marked the sixth consecutive month of improvement in the primary metals index "and its high growth rate is indicating that the recovery in the U.S. primary metals industry will likely continue in the near future."

Earlier

Worldwide Steel Production Hits Record High in 2010

Resources

January 2011 Crude Steel Production World Steel Association, Feb. 21, 2011

Global Crude Steel Production up Due to Growing Demand from Developed Countries by Sharad Matade Moneylife, Feb. 24, 2011

December Steel Shipments up 8.6 Percent from November American Iron and Steel Institute, Feb. 16, 2011

U.S., Canadian Metals Shipments Surged in January Metals Service Center Institute, Feb. 17, 2011

Metal Industry Indicators U.S. Geological Survey, Feb. 18, 2011

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