Global Steel Production Down in August
September 27, 2012
Worldwide crude steel output declined between July and August, with production also falling below the August 2011 level. However, U.S. steel production remained strong, improving on both a month-to-month and year-over-year basis.
Global crude steel production dropped from 130 million tons in July to 124 million tons in August, according to the latest report from the World Steel Association (worldsteel). In addition, total steel production for the 62 countries tracked by worldsteel – representing approximately 85 percent of global steel output – was down 1 percent from the total for August 2011.
The capacity utilization rate among steel manufacturers fell to 75.5 percent from 79.4 percent in July. Compared to August 2011, capacity utilization was 3.2 percentage points lower.
The latest figures indicate that steel production is on a downward swing in most of the major steel-producing regions of the world. As in 2011, output has been declining in the second half of the year after hitting a mid-year peak.
Steel output from China, the world’s largest steel producer, dropped to 58.7 million tons in August, down from 61.7 million tons in July and 1.7 percent below the total for August 2011.
“Chinese steel output, often subsidized by the government, has grown much quicker than demand over the last decade,” Reuters notes. “Slowing construction and industrial activity in the last few months though, hit Chinese steel demand and prices hard, forcing it to export more aggressively.”
Elsewhere in Asia, Japanese production totaled 9.2 million tons, down from 9.3 million tons in July but 3.3 percent above the prior-year level. South Korea’s crude steel production for August was 5.7 million tons, down from 5.9 million tons the previous month but up 2.8 percent compared to August 2011.
So far this year, Asian countries have produced 665.7 million tons of crude steel, 2 percent more than in the first eight months of 2011.
Meanwhile, major steel producers in the European Union mostly posted losses in output. Germany’s crude steel production totaled 3.4 million tons in August, down from 3.6 million tons in July and 7.1 percent less than in August 2011. Spain produced 1 million tons, relatively unchanged from July but 10.3 percent below the level for the same month last year. In the United Kingdom, steel output dropped to 0.8 million tons from 0.9 million tons in July, but remained 4.5 percent higher than in August 2011.
Manufacturers in the E.U. produced a combined total of 115.7 million tons of crude steel in the first eight months of the year, a 4.6 percent decrease from the comparable period in 2011.
Unlike most regions, monthly crude steel output the United States rose to 7.5 million tons in August, up from 7.4 million tons in July and a 1.2 percent increase over August 2011. So far this year, U.S. steelmakers have produced 61 million tons of crude steel, 6.2 percent more than in the same period last year.
However, U.S. steel shipments have been sluggish in recent months. According to the latest data from the American Iron and Steel Institute, July steel shipments fell to 7.9 million tons, a 1.3 percent decrease from the previous month and a low point for 2012 as a whole. Year-to-date shipments remain strong, though, totaling 58 million tons, 11.2 percent higher than for the comparable period in 2011.
U.S. steel products are also experiencing a slowdown, with steel product shipments from metals service centers falling to 3.7 million tons in August, down 1 percent from August 2011, according to the Metals Service Center Institute (subscription required). In the first eight months of 2012, shipments totaled 29 million tons, an increase of 4.9 percent over the same period in 2011. Meanwhile, steel product inventories reached 9 million tons at the end of August, an increase of 5.8 percent over the same month last year and the equivalent of 2.5 months’ supply at current shipping rates.
“While the totals for 2012 appear on track to register a solid increase for 2012 over 2011 consistent with the increase in the overall steel market, conditions as we enter the final quarter of the year do not provide much reason for optimism,” David Phelps, president of the American Institute for International Steel, noted. “The missing element for a return to health for the steel market remains non-residential construction, which has not recovered from the Great Recession as yet.”