Worldwide steel output decreased slightly from January to February, although production continues to grow year-over-year, according to the latest data.

Global production of crude steel totaled 117 million metric tons in February, down from 119 million metric tons in January, the World Steel Association (worldsteel) reported Monday. However, February steel production for the 64 countries tracked by worldsteel climbed 8.8 percent above the total for February 2010, while the capacity utilization rate increased to 82 percent, up from a revised 80.9 percent in January.

Following several months of steady growth, the latest production figures indicate that month-to-month steel output is beginning to slow down. Nevertheless, production remains higher than it did a year ago, suggesting that the overall recovery for the steel industry is still moving forward.

“With the global economy in a recovery mode since late 2009, the steel industry should continue on its recent improvement trend,” financial research firm Zacks.com explains. “However, given its economic sensitivity, we expect global steel demand to improve only gradually, in line with the recovery in the user industries, especially automotive and residential construction.”

Steel output from China, the world’s largest steel producer, rose to 54.3 million metric tons last month, up from 52.8 million metric tons in January and 9.7 percent above the total for February 2010.

Meanwhile, Japan produced 8.9 million metric tons of steel last month, down from 9.7 million metric tons in January but 5.7 percent above the prior-year level. The devastation recently caused by a series of disasters in Japan is likely to constrain the country’s steel output for the short-term future, but the full-scale effect on the Japanese metals industry remains to be seen.

“While the world’s top steel producer thrives, the world’s second-largest producer, Japan, is starting to assess the damages caused by the earthquake and tsunami, which hit the country earlier this month,” Reuters reports. “Some of the country’s major steel plants were directly affected by the natural disaster, and some others had to halt production due to power cuts. Despite the destruction, the Japanese steel industry is likely to go back to pre-recession steel production soon, said the worldsteel director general.”

In total, Asian countries tracked by worldsteel produced 74.9 million metric tons of crude steel in February, a 9.6 percent increase over the same month last year. So far this year, Asia has produced 157.4 million metric tons of steel, 11.9 percent more than in the first two months of 2010.

In the European Union, Germany’s crude steel production totaled 3.7 million metric tons in February, roughly the same as the total for January, or 7.9 percent above the total in February 2010. Production in Italy rose to 2.3 million metric tons, up from 2.1 million in January and 4.9 percent more than February 2010. Spain produced 1.4 million metric tons in February, the same as in January and 6.4 percent more than in February 2010.

E.U. countries produced a combined total of 14.4 million metric tons of steel last month, slightly up from 14.2 million in January and a 7.9 percent increase over February 2010. So far this year, E.U. steel output has totaled 29.1 million metric tons, 7.5 percent higher than during the first two months of last year.

In the United States, crude steel output fell to 6.6 million metric tons last month, down from 6.8 million metric tons in January but 5.6 percent above the total for February 2010. The U.S. has produced 13.8 million metric tons so far this year, up 10.5 percent from the first two months of 2010.

Despite the monthly production declines, shipments from U.S. steel mills have remained relatively strong. The American Iron and Steel Institute last week reported that shipments from U.S. steel mills rose to 7.5 million net tons in January, a 5.9 percent increase over December and 14.4 percent above the January 2010 total.

However, according to the Metals Service Center Institute last week, U.S. steel product shipments from metals service centers dropped from 3.42 million tons in January to about 3.2 million tons in February, though shipments remained 20.2 percent above the prior-year level. At current shipping rates, month-end steel product inventories of nearly 7.94 million tons of steel were equal to a 2.5-month supply.

The U.S. Geological Survey’s latest primary metals index increased 1.5 percent in February, climbing to 158.7 and reaching a six-month smoothed growth rate (which tracks near-term trends) of 12.2 percent. The findings indicate that “the recovery in the U.S. primary metals industry will likely continue,” although “geopolitical turmoil and the reaction to the Japanese earthquake could limit this recovery.”

Earlier

Global Steel Production Increases in January

Worldwide Steel Production Hits Record High in 2010

Japan Crisis Ripples through Global Supply Chain

Resources

February 2011 Crude Steel Production
World Steel Association, March 21, 2011

Steel Industry Outlook — March 2011
Zacks.com, March 23, 2011

China to Drive Steel Production to New Records
by Silvia Antonioli
Reuters, March 23, 2011

January Steel Shipments up 5.9 Percent from December
American Iron and Steel Institute, March 17, 2011

U.S., Canadian Metals Growth Rate Declined in February
Metals Service Center Institute, March 16, 2011

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