U.S., China Drive up Steel Output in July - Analyst Blog
29 8월 2013 - 1:00AM
Zacks
Global crude steel production
trudged higher in July as gains in the U.S. and China capped lower
volumes across some of the key global markets, according to a World
Steel Association (“WSA”) report. The international trade body for
the iron and steel industry said that crude steel output for 64
reporting nations moved up 2.7% year over year in July to touch 132
million tons (Mt). This compares favorably with a 1.9% rise in
June.
The growth in July mostly came on the heels of higher output in
China which produced 65.5 Mt of crude steel. By region, steel
output fell in the European Union, Other Europe, C.I.S. and Oceania
while rising in Asia, North America, South America, Africa and
Middle East.
Growth was seen across major Asian producers barring South Korea.
China, the largest steel producing nation, racked up an increase of
6.2% in output in the reported month. Japan, the second largest
producer, recorded a 0.5% increase to 9.3 Mt. Production rose 4.3%
to 6.7 Mt in India while falling 5.8% to 5.6 Mt in South
Korea.
In North America, crude steel production rose 3.3% to 7.6 Mt in the
U.S., the third-largest steel producer. However, output in Canada
and Mexico slipped 18% and 3.4%, respectively, to 0.9 Mt and 1.4
Mt, respectively.
Europe remains the weakest link as a persistently challenging
economic backdrop continues to lead to a flimsy demand environment
in the region. In the Europe Union, output from Germany fell 5.4%
to 3.4 Mt. Production dropped 9% in France and 8.5% in Italy to
roughly 1.3 Mt and 2.2 Mt, respectively. Spain saw a 3.4% fall in
output. However, production moved up 1.8% to 0.9 Mt in the U.K.
Overall output dipped 6% in the European Union to 13.4 Mt. In the
Other Europe region, Turkey logged a 10.1% fall in production to
2.8 Mt.
Among other notable producers, output nudged down 1.4% and 2.4% in
Brazil and Russia, respectively, to roughly 3 Mt and 5.7 Mt,
respectively. Ukraine had an 8.8% increase to 2.8 Mt. Iran’s output
went up 16.1% to 1.3 Mt.
The WSA noted that crude steel capacity utilization ratio for the
reporting countries fell to 76.8% in July from 79.2% in June. The
ratio also declined 0.8% year over year.
The global slowdown has taken its toll on the steel industry. Steel
prices have been hobbled by weak demand, glut of cheaper imports
and overcapacity in the industry. Furthermore, the festering
Eurozone crisis and its impact on the global economy remain as
overhang on the industry. However, there has been an uptick in
steel prices of late across the U.S. and China, supporting a rise
in production volumes.
Last year, a sluggish construction market, oversupply in the
industry, sticky situation in Europe and slowing growth in emerging
economies weighed on the performance of steelmakers, including
ArcelorMittal (MT), U.S. Steel
(X), Nucor (NUE) and AK Steel
(AKS). Decline in steel prices dented margins and profits of these
steel players.
According to the WSA, world crude steel production clocked 1,548 Mt
in 2012. China alone accounted for roughly 46% of the output with
Japan and the U.S. representing roughly 7% and 6%, respectively.
The WSA envisions global steel usage to rise 2.9% this year, an
improvement from a 1.2% increase in 2012. The optimism reflects a
recovery in demand in the back half of 2013 driven by emerging
economies. The outlook looks even brighter for 2014 as the industry
body anticipates steel usage to go up 3.2% factoring in higher
contributions from developed economies.
Strength in the auto sector and a turnaround in the so-far
beleaguered construction markets are expected to aid to growth in
the U.S. Moreover, efforts of the Chinese government in the form of
structural economic reforms are expected to curb overcapacity in
the industry and contribute to the country’s steel demand. Steel
prices are expected to move north in tandem with improved demand
across most regions.
AK STEEL HLDG (AKS): Free Stock Analysis Report
ARCELOR MITTAL (MT): Free Stock Analysis Report
NUCOR CORP (NUE): Free Stock Analysis Report
UTD STATES STL (X): Free Stock Analysis Report
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