More grass shoots, this time in the depressed global steel industry.
Like other shoots of this colour, it’s not the greenness that’s important, but the potential longevity and what these shoots might develop into.
World Steel production rose in May as producers responded to stock demand, especially from some car companies.
The World Steel Association said output in May was 95.6 million tonnes, up from 89 million tonnes in April.
The May figure was down 21% from May 2008, better than the 23.6% drop in the year to April 2009.
Our two producers, BlueScope and OneSteel haven’t seen any strength in their shares prices, but both have been upgraded this week by leading analysts.
BlueScope shares rose 3 cents yesterday to $2.51 and OneSteel shares finished up 6 cents at $2.54. Hardly the strongest of performances, but both were a touch stronger than the 1.3% rise in the overall market.
At the same time the world’s biggest steel company, ArcelorMittal is playing things very conservatively.
CEO, Lakshmi Mittal told a New York steel conference this week that his giant company is running at 50% capacity at the moment; he also acknowledged that overcapacity will continue globally this year and that a full recovery in demand will be slow and gradual.
Reuters and Bloomberg both reported that he indicated AreclorMittal would only adjust production in response to a pickup in demand.
So the green shoots for steel won’t grow quickly, and as Mr Mittal pointed out in his speech it all depends on China.
Mr Mittal said that a period of intense inventory destocking since the 2008 fourth quarter, however, has depleted many producer’s stockpiles, paving the way for some pickup in steel demand.
His company is shifting its strategy to focus more on lower-cost developing countries, rather than the developed economies of North America and Europe because the future growth prospects are located in China and other emerging markets.
ArcelorMittal’s goal is to increase its production in the emerging economies to 50%. Currently, 40% of its total production derives from the emerging market sources.
His executives from Brazil told the same New York conference that demand and production in that country were starting to rebound in response to stock rebuilding.
The World Steel Association said that China’s crude steel production for May 2009 was 46.5 million tonnes 0.6% higher than May 2008 and higher than the 43.9 million tonnes produced in April (which was 3.9% down on April 2008).
Japan produced 6.5 million tonnes (up from 5.7 million in April) of crude steel in May 2009, down 38.5% compared to May 2008. South Korean production fell 11.8% from May 2008, producing 4.2 million tonnes last month (but up 100,000 tonnes from April).
In the EU, Germany’s crude steel was 2.2 million tonnes, in May 2009, a decrease of -47.8% from May 2008. Italy produced 1.7 million tonnes, in May 2009, down by 41.6% from 2008.
Spain produced 1.2 million tonnes, of crude steel in May 2009, 41.3% less than the same month last year, while output in France was down 41.3% from May 2008, producing 1.0 million tonnes in May.
The US produced 4.3 million tonnes in May 2009, down 50.6% from May 2008. Last year. It was up from 3.9 million tonnes in April.
Brazil produced 1.9 million tonnes in May 2009, 36.3% lower than May 2008, but up from April’s 1.7 million tonnes.
Russian crude steel production for May 2009 was 4.7 million tonnes, down 31.2% from May 2008. Ukraine produced 2.4 million tonnes of crude steel in May 2009, 40% lower than May 2008.
The Association said world crude steel production for the first five months of 2009 was 449 million tonnes, down 22.4% over the same period of 2008. Asia produced 294 million tonnes, off just 8.8% over the first five months of 2008.
The EU produced 50.7 million tonnes, down 44.4% from the first five months of last year; North American output fell 49.3%, producing 29 million tonnes during the first five months of 2009.
China produced 217.2 million tonnes of crude steel for the first five months of 2009, a slight increase of 0.4 % on the same months of 2008.
Chinese output in the first four months of this year was up 0.1% on the first four months of 2008, so the improvement is there.
All the other major steel producing countries showed a decrease for the first five months of 2009.
