World crude steel production continues to rise, but it will pay to keep watching what is happening in the huge Chinese market where’s there’re reports of a softening this week in spot prices.
Crude steel production in March was 120 million tonnes, as steel companies in China and several other countries lifted output.
March was 30.6% above the depressed levels of March 2009, and up 12 million tonnes from February because of more production days and the absence of the Lunar New Year which dropped production in some Asian countries, especially China and South Korea.
Capacity utilisation (see above graph) was flat, indicating that output and demand may have stabilised around the current level.
So that requires investors to keep a close eye on what is happening in the most important steel producer of all, China.
The continuing tightening of restrictions over lending and buying houses by individuals and corporates has seen the listed property sector on the Chinese market sink, along with banks, dragging the overall market into a correction with a fall of more than 11% this year.
Surging demand from the construction sector, especially commercial property, has helped pump up Chinese steel demand, production and demand for iron ore from Australia.
Spot iron ore prices are reported to have retreated a touch from the $US189.50 a tonne level reported last week.
China lifted steel production to 55 million tonnes in March, up 22.5% on March last year and 10% above February.
It’s doubtful output will rise further from this level in 2010 given the Government’s cuts to lending quotas for banks and the restrictions on property purchases.
The World Steel Association said that the first three months of 2010 saw global output rise 29% to 342.36 million tonnes in the 66 major producing countries, from the 265.47 million tonnes in the first quarter of last year.
Asia produced 219 million metric tons (mmt or tonnes) of crude steel, an increase of 27% over the first quarter of 2009.
Chinese production was 158 million tonnes, up 24%; Japan lifted quarterly production 50% to 26.5 million tonnes, while South Korea lifted its quarterly output 29% to more than 13.2 million tonnes.
The EU produced 42 mmt of crude steel in the first quarter of 2010, up 37% compared to the same quarter of 2009, while North America reported an increase of 53.8%, producing 27 mmt of crude steel during the first three months of 2010.
US production was up 61% to more than 19.3 million tonnes.
In March, Japan produced 9.3 mmt of crude steel in March 2010, up 62.8% compared to the same month last year. India’s crude steel production for March 2010 was 5.5 mmt, 9.2% higher than March 2009, South Korea produced 4.8 mmt of crude steel in March 2010, 29.6% higher than March 2009.
In the EU, Germany’s crude steel production for March 2010 was 4.0 mmt, an increase of 91.5% compared to March 2009. Italy produced 2.4 mmt, 43.5% higher than the same month in 2009. Spain produced 1.6 mmt of crude steel in March 2010, up 33% on March 2009.
Russia’s crude steel in March 2010 was 5.5 mmt, 19.6% higher than the same month 2009. In March 2010, Ukraine produced 3.0 mmt, a rise of 25.8% compared to March 2009.
The US produced 6.9 mmt of crude steel in March 2010, an increase of 74.2% compared to March 2009 and 10% more than February as the car industry lifted demand.
Brazilian crude steel production was 2.8 mmt, 63.4% higher than March 2009.
The world crude steel capacity utilisation ratio of the 66 countries in March 2010 was 80.2%, unchanged from February 2010.
Compared to March 2009, the utilisation ratio in March 2010 increased by 15.3 percentage points.
