Global crude steel production continues to weaken, with July figures from the World Steel Association showing another slide in capacity utilisation across the 66 major steel producing countries.
Preliminary figures issued by the Association said capacity utilisation "declined significantly to 75.1% from 80.4% in June 2010".
"Compared to July 2009, the utilisation ratio in July 2010 increased by 2.7 percentage points".
Steel production worldwide in July rose 9.6% year-on-year to 114.794 million tonnes, but it fell again for a second month to be down.
That’s back to the levels seen in February of this year, while the utilisation rate is now back to where it was in January.
Capacity utilisation is an important measure because it tells us how hard steel producers are running their blast furnaces and steel mills in response to demand,
Falling utilisation means they are reducing their production in response to declining orders.
Monthly steel production peaked in May at just over 124.5 million tonnes.
July’s output was 8.7% under that peak and nearly 3% down from June’s figure.
The slide seems to be coming from the downturn in Chinese output. Steel production there peaked in May at 56.14 million and was 51.7 million tonnes last month.
That’s a fall of around 7% from the May peak and more than 3% from June’s level. July’s output was just 2.9% above that of July 2009.
If this continues, China’s production will start falling in comparison to the same month a year ago from around September onwards.
While global production was up 25% in July from the same month of 2009, it’s no longer of much interest in terms of the health of the industry.
It’s clear from the production figures and the capacity utilisation slide, that the current upswing has peaked and is on the way down.
That confirms the feeling that in the US, Japan, China and parts of Europe, there’s been a cooling of demand, especially from the car and construction industries.
Among the major producers, for the second month in a row, Turkey was the second largest producer in Europe after Germany, but ahead of Italy.
Turkey produced 2.36 million metric tonnes (mmt) in July, Italy 2.2 mmt.
Steel production in July was down 4-15% across most major regions (except South America where it rose).
In the US output last month was down around 8%; in Germany it was around 14% (the EU was off 10%); Japan was down around 4% to 5%.
Indian production saw a rise in July to 5.75 million tonnes, the highest this year.
In fact India is the best performing of all major producers in 2010 (and it’s an expanding market for Australian coking coal exporters).
South Korean output was nearly steady in July on June, but it’s down around 4% from the May peak.
Japanese steel output fell for the second month in a row in July as producers cut back during slack seasonal demand.
The country’s crude steel output, which is not seasonally adjusted, dropped 1.2% from June to 9.22 million tonnes in July.
That followed a 3.8% month-on-month fall in June.
Still, Japan’s steel output rose 20.4% from a year ago.
But Japanese steel groups are exporting between 45 and 50% of their monthly output at the moment, which much of that going into China and the rest of Asia.
