The Hindu Business Line : Record world steel output despite cuts

After the US where cuts in steel production have been significant so far, steelmakers in Europe, and to some extent in China, have started to cut production. This follows large rise in China's exports and weakening demand for the industrial metal.

Decline in Nov

In the US, November crude steel production was 5.5 per cent lower year-on-year (y-on-y) and 12.5 per cent down from August production rate, according to reports.

Despite slowdown elsewhere, due to the still massive growth in China's output, global steel production was up 10.4 per cent y-on-y in November and 9.5 per cent higher y-on-y in the first 11 months of 2006.

China's record

World crude steel production is forecast at a new high of 1,238.3 million tonne in 2006, up from 1,136.7 million tonne of 2005. China accounts for a third (421.5 million tonne) a new record for the country, up from 355.8 million tonne in 2005.

Other producers

Other producers are at a distance. Western Europe 199.5 million tonne (188.2 million tonne), North America 132.6 million tonne (126.2 million tonne), CIS 120.2 million tonne (114.9 million tonne) and Japan 116.0 million tonne (113.0 million tonne).

The adjustment to world steel production reflects the movement of the market into small over-supply in recent months as a result of higher Chinese exports, weaker demand growth (in China and the US) and some small over-production, commented an analyst from Macquarie Research. The rapidity of production cuts, especially in the US, reflects the improved management practices of the global steel industry (led by Arcelor Mittal) as well as the perceived benefits of cutting production early, according to the analyst.

World pig iron production was up 10.7 per cent y-on-y in the first 11 months of this year. Pig iron is the main raw material in the integrated steel-making process.

For 2006, production is forecast at 875 million tonnes, up from 788 million tonnes in 2005. At a forecast 409 million tonnes, China accounts for almost half the global production, followed at a distance by Western Europe (101 million tonnes) IS (87 million tonnes) and Japan (84 million tonnes).

India's pig iron production has been rising steadily in the last few years.

For 2006, it is forecast a t 27.4 million tonnes (26.1 million tonnes).