Global crude steel output rose for a sixth consecutive month in July as gains across China and the U.S. offset a decline in the European Union – according to a recent World Steel Association (“WSA”) report. Healthy gains across the Middle East and Africa also supported the growth. However, the pace of growth slowed on a monthly basis in the reported month.
According to the international trade body for the iron and steel industry, crude steel production for 65 reporting nations nudged up 1.7% year over year in July to 137 million tons (Mt). This follows a 3.1% gain last month.
By regions, production data paints a generally positive picture with gains registered across all areas barring the European Union.
Growth was seen across major Asian producers except Japan – the second largest producer – which saw a flat production at 9.3 Mt. Higher sales tax is affecting steel demand in that country. Output from China – the world's biggest steel maker – went up 1.5% year over year to 68.3 Mt in July. Production in India, the fourth-largest producer, rose 1.7% to around 7 Mt. South Korea raked in a 6.2% gain to 5.9 Mt. Consolidated output were up 1.7% to 92.4 Mt in Asia.
In North America, crude steel production rose 2.3% to 7.6 Mt in the U.S. – the third-largest steelmaker. Output in Canada went up 5.7% to around 1.1 Mt. Overall production for the region was up 2% to roughly 10.4 Mt.
In the Europe Union, production from Germany – the biggest producer in the region – rose 1.5% to 3.4 Mt. Output fell 3.6% in Italy to 2 Mt while rising 1.6% to 1.4 Mt in France. Spain saw a 5.9% rise to 1 Mt. Production slipped 4.4% in the UK to around 1 Mt. Total output dipped 2% in the European Union to 13.3 Mt.
Output in the Middle East moved up 8.3% to 2.4 Mt with healthy gains witnessed across Iran, Qatar and Saudi Arabia. Africa logged a solid 21.2% gain to 1.5 Mt in the reported month.
Among other notable producers, production from Turkey was up 1% to 2.8 Mt. Russia saw a healthy 8.1% rise to 6.2 Mt while Ukraine – which have been battered by fierce conflict with Russia – recorded a 11.7% decline to 2.5 Mt. Output from Brazil, the largest producer in South America, inched up 0.5% to 2.9 Mt.
Crude steel capacity utilization ratio for the reporting countries was 75.4% in July 2014, down from 76.6% a year ago and 78.3% in the previous month.
Steelmakers globally remain hobbled by challenging market fundamentals and weak pricing. Overcapacity in the industry, a flood of cheap imports and weak demand in Europe hammered steel prices for the most part of 2013, hurting margins of major producers including ArcelorMittal (MT), U.S. Steel (X), Nucor (NUE) and AK Steel (AKS).
With the global economy gradually on the mend 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 increase 3.1% this year and further rise 3.3% in 2015. Improving demand is also expected to jack 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 housing market and weaker infrastructure investment growth.
Nevertheless, a gradually healing economy, strength in the automotive market and a rebound in non-residential construction and housing markets should provide a much-needed thrust to the U.S. steel industry this year. Moreover, an expected rise in steel usage in the Euro-zone on the back of a flourishing auto sector and a recovering construction market looks encouraging after a lumpy 2013.
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