Worldwide crude steel production increased on both a month-to-month and year-over-year basis in January, but the steel industry may be facing headwinds from unstable demand and a growing overcapacity problem.
Global crude steel production rose from 121.3 million tons in December to 125 million tons in January, according to the latest report from the World Steel Association (worldsteel). In addition, total steel output for the 62 countries tracked by worldsteel, which represent roughly 85 percent of global steel production, was up 0.8 percent from the total for January 2012.
The latest figures indicate that steel production is continuing its upward in most of the major steel-producing regions of the world. In 2012, global steel production hit an all-time high of 1.55 billion tons, a 1.2 percent gain over the prior year, despite overall annual declines in South America and the 27 countries of the European Union.
Steel output from China, the world’s largest steel producer, climbed to 59.3 million tons last month, up from 57.7 million tons in December and 4.6 percent above the total for January 2012. Despite these gains, Chinese steelmakers remain vulnerable to unsteady demand and the mounting long-term problem of overcapacity.
“China’s steel sector, awash with excess capacity, has been suffering since 2011, when China’s economy started to slow, but took a harder hit last year as demand remained tepid and trading firms built up inventory,” the Wall Street Journal explains. “The country accounts for 46 percent of the world’s steel output, making the pain of weak demand more acute.”
Elsewhere in Asia, Japan produced 8.9 million tons of steel last month, up slightly from the 8.7 million-ton total in December and 2.7 percent above the total for January 2012. South Korean steel production for January was 5.8 million tons, relatively unchanged from the previous month but 0.4 percent lower than the prior-year total.
As a whole, Asian steelmakers produced 82.3 million tons of crude steel in January, 4 percent more than in the same month last year.
Meanwhile, major steel producers in the European Union posted mixed results in January. Germany’s crude steel output reached 3.6 million tons, up from 3 million in December and a 5.4 percent gain over the same month last year. However, Italy’s crude steel production totaled 1.8 million tons, up from 1.7 million tons in December but 19.7 percent below the total for January 2012. France’s crude steel production rose to 1.4 million tons, up from 1 million tons in December but 1.3 percent below the level for January 2012.
Manufacturers in the E.U. produced a combined total of 13.5 million tons of steel last month, 5 percent less than in January 2012.
“Steel-industry earnings have slumped as Europe’s economic crisis saps demand and slower Chinese growth weighs on commodity prices,” Bloomberg News reports. “European steelmakers are grappling with excess capacity that’s pushing down prices as operating costs climb. The region has capacity to make about 210 million metric tons of steel a year, while demand in a ‘normal market’ is 150 million to 160 million tons…”
Monthly crude steel output in the U.S. inched up last month, climbing to 7.3 million tons from 7.1 million tons in December and marking a 5.8 percent decline from the total for January 2012.
Steel shipments have been on an upswing in the U.S. in recent months, with steel mills shipping 7.5 million net tons in December, a 1.2 percent increase from November, according to the most recent data from the American Iron and Steel Institute. For 2012 as a whole, mills shipped 96 million net tons, 4.4 percent more than the total for 2011.
U.S. steel products have also seen an increase. The Metals Service Center Institute reports that product shipments from metals service centers surged to 3.6 million tons during January, a 43.9 percent gain over December. However, on a year-over-year basis, January’s shipments were 2.1 percent below the total for January 2012.