World steel output continue to slide

Archiv – Dismal economic indicators have led customers to buy only as much metal as needed, keeping steel shipments down and output low.
Steel shipments from the United States and Canada have decreased for two consecutive months as continued economic uncertainty kept customers from buying more than absolutely necessary.World | Dismal economic indicators have led customers to buy only as much metal as needed, keeping steel shipments down and output low.
Steel shipments from the United States and Canada have decreased for two consecutive months as continued economic uncertainty kept customers from buying more than absolutely necessary.
According to the American Iron and Steel Institute (AISI), the US shipped 4.576 million tonnes steel in January ‘€’ or half the January 2008 total. It was also a decrease of 0.8% from December’s steel shipment total of 4.613 million tonnes. The steep deterioration in the world economy has caused users of steel, such as construction and automotive firms, to scale back on orders, the Financial Times reports.
Shipments to automotive customers were down 58.3% and shipments to construction fabricators and contractors dropped 59.6% for the month against the previous year, AISI continues. Shipments to oil and gas markets were down 20.2% in January versus the same month in 2008.
In February, steel shipments from both countries fell by more than 40% from 2008 levels, the Metal Service Center Institute reports.
Shipments of US steel products totaled 2.4 million tonnes last month, down 43.3% from February 2008 volumes. At current shipping rates, a month-end inventory of 8.3 million tonnes equal to a 3.4-month supply.
At the same time, Canada shipped 385,100 tonnes of steel, sliding 42.1% from February 2008. With 1.2 million tonnes of month-end inventory, it has a 3.1-month supply at current shipping rates.
Unsurprisingly, steel output in the US also fell in February. The US produced 3.8 million tonnes of steel last month, a decrease of 54.2% from February 2008, the World Steel Association says. Comparable declines were seen globally as world steel output fell 22% in February.
In the European Union, there were production drops of 31.6% in Germany, 35.7% in France, 35.7% in Spain and 39.9% in Italy. Brazilian steel production decreased by 39% last month from February 2008 totals, and both Russia and Ukraine saw steel output fall by 32.1% and 33.6% respectively.
Iran and China were the only two countries who reported positive gains. Iran steel production gained 15.9% from February 2008 to 900,000 tonnes. China produced 40.4 million tonnes of February’s overall world production of 84 million tonnes. The country reported an increase of 4.9% from last year’s same-month total.
Not all the steel, however, is being used. In fact, steel and other industrial products exceed domestic and foreign demand. “As of this month, about 30% of the nation’s aluminium production capacity is idle, as is 20% of cement and plate-glass capacity and 70% of semiconductor production,” according to China’s industry ministry.
To combat the surplus, the Chinese government invested four trillion yuan (about US$585 billion) to boost construction of public works, thereby increasing demand for steel and thus reducing idle capacity. Along with the stimulus package, Beijing announced another plan in January for reducing steel overcapacity.
The plan indicates that “new capacity would be approved only in exchange for the closure of outdated production facilities,” a separate Financial Times article says. The Chinese government also added that “within three years, it wanted to see 45% of the market in the hands of the top five steelmakers, up from 28.5% now.”
Elsewhere in Asia, February steel output slid 24.8% in South Korea and 44.2% in Japan from 2008.
One month on, steel production in the US continues to decline. As of the week ended March 21, US steel output was 2.14 million tonnes, a separate AISI report notes. That is a 52$ decrease from the same period last year, but is up 5.3$ from the week ended March 14, 2009. Year-to-date steel production through March 21 was 11.692 million tonnes, 52.7% less than 2008.
Aluminium shipments last month fared slightly better in Canada, but did worse in the US.
Canadian aluminium product shipments were down 26.8% in February, shipping merely 10,600 tonnes. Inventories at the end of February totaled 32,800 tonnes of aluminium, and at current shipping rates, equal to a 3.1-month supply.
The US shipped 83,200 tonnes of aluminum in February, 45.9% less than same month last year. At current shipping rates, the nation’s 347,900 tonnes of aluminum inventory equal to a 4.2-month supply.
Lakshmi Mittal, chairman of ArcelorMittal, the world’s largest steel maker, told the Financial Times last month that the forecasts of world steel demand falling by 10% this year ‘€’ making it the biggest year-on-year decline since 1945 ‘€’ were “plausible.” Still, Mittal said output could start to climb after the first three months of 2009.
“The first quarter of 2009 would probably mark the bottom of the market for the steel industry,” Mittal continued. “After this, I can envisage some kind of pick-up in shipments, as customers will find they need to re-order to build up stocks, which have now fallen to very low levels.”