Global Steel Production Slows in July

25.Aug,2010

Worldwide steel production declined again in July, continuing a downward trend in total monthly output, though production remained above its prior-year level, according to the World Steel Association.

Global production of crude steel increased 9.6 percent year-over-year in July, while the capacity utilization rate among steel manufacturers fell to 75.1 percent from a revised 80.4 percent in June, the World Steel Association (worldsteel) reported Friday. Total steel production for the 66 countries tracked by worldsteel declined to 115 million metric tons last month, down from 119 million metric tons in June and 124 million metric tons in May, though higher than the 105 million metric tons produced in July 2009.

Following significant monthly gains through May, steel production rates have been slowing down in recent months among many of the major steel-producing regions that report to worldsteel. However, output remains well above last year's levels, indicating that a rebound in the steel industry is ongoing.

Steel output from China, the world's largest steel producer, fell to 51.7 million metric tons in July, down from 53.8 million metric tons in June but still 2.2 percent above July 2009. Japan's production decreased to 9.2 million metric tons in July from 9.4 million in June, but remained 20.4 percent above the prior-year level, while South Korea's production remained at 4.8 million metric tons in July, relatively unchanged from June though 16.2 percent higher than in July 2009.

In total, Asian countries have produced nearly 522 million metric tons of steel so far this year, 20.8 percent more than in the same period last year.

Among European countries, Germany's crude steel output dropped to 3.5 million metric tons in July, down from 3.9 million in June but marking a 29.7 percent increase over July 2009. Meanwhile, production in Italy inched down to 2.2 million metric tons from 2.3 million in June, but remained 33.4 percent higher than the prior-year level. France's production remained relatively static at around 1.5 million metric tons in both July and June, but was 30.7 percent above July 2009.

European Union countries have produced a total of approximately 104 million metric tons of steel year-to-date, 41 percent more than in the first seven months of 2009.

In the United States, crude steel production fell to 6.7 million metric tons in July, down from 7.2 million in June, but up 32.9 over the July 2009 level. So far this year, U.S. steelmakers have produced 47.6 million metric tons, 62.4 percent more than during the same period last year.

Shipments from U.S. steel mills have also slowed, reflecting decreased demand for steel products in recent months. According to the American Iron and Steel Institute last week, the nation's steel mills shipped 7.3 million net tons in June, down 0.7 percent from May. However, U.S. steel mills shipments in June remained 52 percent above the total shipped during the same last year.

Shipments from metals service centers have experienced a similar decline. A report from the Metals Service Center Institute last week found that steel product shipments fell to 2.87 million tons in July, down from 3.22 million tons in June. Although July shipments were 14.5 percent above the same month last year, this followed 30.8 percent and 29.4 percent year-over-year growth in June and May, respectively.

Steel service centers' inventories increased from 7.38 million tons in June to 7.46 million tons in July, 30.2 percent higher than the same month a year ago and reflecting a 2.6-month supply at current shipping rates.

Despite the slowdown, the U.S. Geological Survey's latest primary metals index, which tracks market indicators, increased 0.5 percent in July to 146.7, up from the revised 146 reading in June. However, the index's six-month smoothed growth rate, which measures near-term trends, decreased from 7.5 percent in June to 6.4 percent in July, "suggesting that the recovery in the U.S. metals industry will slow further in the months ahead."

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