Worldwide steel production steadily increased last year, led primarily by gains in North America and Asia. Although the pace of growth slowed slightly, total steel production in 2012 still hit a record high level.
Worldwide crude steel production rose from 1.53 billion metric tons in 2011 to 1.55 billion tons through the end of 2012, representing a 1.2 percent year-over-year increase, according to the latest report from the World Steel Association
(worldsteel). Total steel output for the 62 countries tracked by worldsteel hit an all-time high last year.
In addition, worldsteel reports that 2012 closed with an increase in December steel production, with global output rising to 121.3 million metric tons last month, 2.4 percent above the December 2011 total.
The latest figures indicate that steel production continues to gain momentum, but output is increasingly uneven across the globe. Steel production rose last year despite an overall annual decline in the 27 countries of the European Union and in South America. Steelmakers in Asia and North America drove most of the growth in 2012.
Output from China, the world's largest steel producer, rose to 716.5 million metric tons in 2012, a 3.1 percent increase over 2011, while the country's share of global raw steel output increased from 45.4 percent in 2011 to 46.3 percent last year.
Elsewhere in Asia, South Korea's crude steel production totaled 69.3 million tons, a 1.2 percent increase compared to 2011. Japan produced 107.2 million tons of crude steel in 2012, a 0.3 percent decrease from 2011.
In 2012, Asian steelmakers produced 1.01 billion tons of crude steel, an increase of 2.6 percent over 2011 totals. The region's share of world steel production grew slightly from 64.5 percent in 2011 to 65.4 percent in 2012.
Meanwhile, major steel producers in the European Union struggled last year. Germany produced 42.7 million tons of crude steel in 2012, a decrease of 3.7 percent from 2011. Italy produced 27.2 million tons in 2012, a 5.2 percent decrease from 2011, France's crude steel production totaled 15.6 million tons, down 1.1 percent, and Spain produced 13.6 million tons, 12.1 percent below the total for 2011.
Manufacturers in the E.U. produced a combined total of 169.4 million tons of crude steel last year, a 4.7 percent decline from the 177.7 million tons of output in 2011.
"Last year market conditions worldwide made it a tough year for most steel producers. Steel prices were depressed for most of 2012. Reduced demand for steel and erratic iron ore prices impacted many producers," Seeking Alpha
notes. "A huge excess of steel producing capacity in certain countries, specifically euro zone countries, has been, and is continuing to be a major problem for producers with European operations. Europe is without question the most problematic region for steelmakers."
In contrast, the United States made solid gains in steel production last year. Annual crude steel output in the U.S. rose to 88.6 million tons, a 2.5 percent increase over 2011.
Although the year-end totals have yet to be tallied, U.S. steel products posted mixed performance in the final months of 2012. Steel product shipments from metals service centers fell to 3.09 million tons in November, down 11.9 percent from October and 6.4 percent below the total for November 2011, according to the Metals Service Center Institute (subscription required)
. However, total shipments for the first 11 months of 2012 reached 38.7 million tons, 2.5 percent above the total for the same period the previous year.
Shipments from steel mills also inched down. The American Iron and Steel Institute
reports that steel mills shipped 7.4 million net tons in November, a 0.5 percent decrease from the 7.43 million net total from the previous month and a 0.2 percent decline from November 2011. Year-to-date shipments totaled 88.5 million net tons in November, a 5.6 percent increase over the same period in 2011.
While global steel demand is rising, it's increasing at a slower pace than last year and many steelmakers are scaling back production capacity. According to worldsteel, the average crude steel capacity utilization rate fell to 78.8 percent in 2012, down from 80.7 percent in 2011.
"While the global steel demand is likely to increase at a CAGR [compound annual growth rate] of about 3.2 percent during the CY12 [calendar year 2012] to CY17, global supply of the metal, during the same period is likely to increase at a similar rate," MoneyControl.com
explains. "Despite a slower growth in steel supply when compared with the growth in demand...the global steel industry is likely to remain in a surplus state during the next four years. Increase in demand is likely to be offset by the increase in production as there is enough scope for the manufacturers to improve upon their operating rates."