No wonder demand for iron ore is rising rapidly, and prices even faster.
With reports global spot prices are around $US140 a tonne, more than double the current benchmark price of $US60 a tonne, the explanation can be found in the continuing strength of the global steel industry.
Steel capacity utilization is now at 1 5 month high and rising, with strong gains coming from the US and Japan in response to rising demand.
World steel production last month was 108 million tonnes, 24.2% higher than February 2009, according to the latest figures from the World Steel Association, which covers the 66 major steel producing economies.
Production for the first two months of 2010 was 27.6% ahead of 2009 at almost 221 million tonnes.
China’s crude steel production for February 2010 was 50.4 million tonnes, up 22.5% on February 2009. It was down form the more than 52.5 million tonnes produced in January.
Japan’s production jumped 54% on a year ago to 8.4 million tonnes, South Korea saw a 25% rise to 3.9 million tonnes and Germany’s steel output was up 34% at 3.4 million tonnes.
America produced six million tonnes in the month, up 51% on a year ago. Australian steel output soared 89% to half a million tonnes last month, according to figures from the.
February’s production was down on a restated January figure.
That restatement saw January’s output boosted as more accurate production figures were made available
The fall from January was around 5%, with a decline in China, other developing countries and the developed world.
But that’s caused by the fresh figures boosting January’s first estimate.
The Lunar New Year in China, Taiwan and South Korea would have had some impact on February production levels.
Brazilian crude steel production was 2.4 million tonnes, up 47.9% on February 2009.
Iran produced 1.0 million tonnes,
The world crude steel capacity utilisation ratio for the 66 countries in February 2010 was 79.8%, a best since September 2008.
That’s the month Lehman Brothers failed.
Compared to February 2009, the utilisation ratio in February 2010 increased by 12.0 percentage points, as shown in this graph from the World Steel Association.
