Global crude steel production notched up its seventh straight monthly gain in August as higher output across major Asian producers and the U.S. offset relatively flat production in the European Union – according to a recent World Steel Association (“WSA”) report. The growth was also backed by gains across the Middle East and Africa.
However, as witnessed in July, the pace of growth once again slowed on a monthly basis in the reported month, hit by a slowdown in China – the world’s biggest steel maker.
The international trade body for the iron and steel industry said that crude steel production for 65 reporting nations moved up 1.4% year over year in August to 135 million tons (Mt). This follows a 1.7% gain last month.
August reading showed production gains across major steel producing nations in Asia. Growth, however, slowed on a monthly basis in China on subdued steel demand due to a downturn in the country’s housing market.
China’s steel output rose 1% year over year to 68.9 Mt in August versus a 1.5% gain a month ago. A slowing economy is hurting steel producers in the country. China’s industrial output rose 6.9% in August (decelerating from a 9% gain in July) – the slowest pace in almost six years, raising concerns the world’s second-biggest economy is losing steam.
Output rose 2.2% to 9.3 Mt in Japan – the second largest producer. India, the fourth-largest producer, raked in healthy gain with production rising 5.2% to roughly 7 Mt as the country’s major producers beefed up output in the reported month. South Korea racked up the biggest gain of 8% to 5.3 Mt. Consolidated output in Asia was up 1.7% to 92.5 Mt.
In North America, crude steel output went up 2.9% to 7.7 Mt in the U.S. – the third-biggest steelmaker. Output in Canada rose 7.1% to around 1.1 Mt. Total production for the region was up 2% to roughly 10.5 Mt in August.
Overall output in the Europe Union was essentially flat in August at around 12 Mt. Germany – the biggest producer in the region – produced 3.1 Mt, down 1%. Output fell 0.8% in Italy to 1 Mt and was also down 0.4% in Spain to 1.1 Mt. Production slipped 9.1% in France to around 1.1 Mt while the UK saw an 11.7% gain to 1.1 Mt.
Output in the Middle East moved up 2% to 2.3 Mt on gains across Iran, Qatar and Saudi Arabia. Africa clocked a healthy 23.5% rise to 1.5 Mt in August.
Among other notable producers, production from Turkey climbed 13.9% to 2.9 Mt. Russia registered a 5.8% gain to 6.2 Mt while Ukraine – which have been hobbled by fierce conflict with Russia – saw a 37% slide in output to 1.8 Mt, leading to a 6.5% fall in overall output in the C.I.S. region. Output from Brazil, the largest producer in South America, clipped 1.4% to 2.9 Mt.
Crude steel capacity utilization ratio for the reporting countries was 74.2% in August 2014, down from 75.6% a year ago and 75.4% in the previous month.
Steelmakers globally remain hamstrung by challenging market fundamentals and weak pricing. Overcapacity in the industry, a glut of cheap imports and weak demand in Europe hammered steel prices for the most part of 2013, hurting margins of major producers including ArcelorMittal, U.S. Steel, Nucor, AK Steel and Steel Dynamics.
With the global economic recovery gathering steam and activities picking up in the construction sector, 2014 promises to be a transition year for the steel industry. The WSA sees continued recovery in steel demand and expects global steel usage to rise 3.1% in 2014 and further improve to 3.3% next year. Higher demand is also expected to perk up steel prices.
However, the industry faces challenges in form of an expected deceleration in steel usage in China due to a slowdown in the country’s property market and weaker infrastructure investment growth.
Nevertheless, a gradually healing economy, strength in the automotive market and a rebound in commercial construction and housing markets should provide a much-needed thrust to the U.S. steel industry this year and the next.
Source – zacks
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