Global crude steel production trudged higher in July as gains
in the U.S. and China capped lower volumes across some of the key
global markets, according to a World Steel Association ("WSA")
report. The international trade body for the iron and steel
industry said that crude steel output for 64 reporting nations
moved up 2.7% year over year in July to touch 132 million tons
(Mt). This compares favorably with a 1.9% rise in June.
The growth in July mostly came on the heels of higher output in
China which produced 65.5 Mt of crude steel. By region, steel
output fell in the European Union, Other Europe, C.I.S. and
Oceania while rising in Asia, North America, South America,
Africa and Middle East.
Growth was seen across major Asian producers barring South Korea.
China, the largest steel producing nation, racked up an increase
of 6.2% in output in the reported month. Japan, the second
largest producer, recorded a 0.5% increase to 9.3 Mt. Production
rose 4.3% to 6.7 Mt in India while falling 5.8% to 5.6 Mt in
In North America, crude steel production rose 3.3% to 7.6 Mt in
the U.S., the third-largest steel producer. However, output in
Canada and Mexico slipped 18% and 3.4%, respectively, to 0.9 Mt
and 1.4 Mt, respectively.
Europe remains the weakest link as a persistently challenging
economic backdrop continues to lead to a flimsy demand
environment in the region. In the Europe Union, output from
Germany fell 5.4% to 3.4 Mt. Production dropped 9% in France and
8.5% in Italy to roughly 1.3 Mt and 2.2 Mt, respectively. Spain
saw a 3.4% fall in output. However, production moved up 1.8% to
0.9 Mt in the U.K. Overall output dipped 6% in the European Union
to 13.4 Mt. In the Other Europe region, Turkey logged a 10.1%
fall in production to 2.8 Mt.
Among other notable producers, output nudged down 1.4% and 2.4%
in Brazil and Russia, respectively, to roughly 3 Mt and 5.7 Mt,
respectively. Ukraine had an 8.8% increase to 2.8 Mt. Iran's
output went up 16.1% to 1.3 Mt.
The WSA noted that crude steel capacity utilization ratio for the
reporting countries fell to 76.8% in July from 79.2% in June. The
ratio also declined 0.8% year over year.
The global slowdown has taken its toll on the steel industry.
Steel prices have been hobbled by weak demand, glut of cheaper
imports and overcapacity in the industry. Furthermore, the
festering Eurozone crisis and its impact on the global economy
remain as overhang on the industry. However, there has been an
uptick in steel prices of late across the U.S. and China,
supporting a rise in production volumes.
Last year, a sluggish construction market, oversupply in the
industry, sticky situation in Europe and slowing growth in
emerging economies weighed on the performance of steelmakers,
). Decline in steel prices dented margins and profits of these
According to the WSA, world crude steel production clocked 1,548
Mt in 2012. China alone accounted for roughly 46% of the output
with Japan and the U.S. representing roughly 7% and 6%,
The WSA envisions global steel usage to rise 2.9% this year, an
improvement from a 1.2% increase in 2012. The optimism reflects a
recovery in demand in the back half of 2013 driven by emerging
economies. The outlook looks even brighter for 2014 as the
industry body anticipates steel usage to go up 3.2% factoring in
higher contributions from developed economies.
Strength in the auto sector and a turnaround in the so-far
beleaguered construction markets are expected to aid to growth in
the U.S. Moreover, efforts of the Chinese government in the form
of structural economic reforms are expected to curb overcapacity
in the industry and contribute to the country's steel demand.
Steel prices are expected to move north in tandem with improved
demand across most regions.
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