News Room - Steel Industry

Posted on 22 Apr 2009

Global steel output tumbles but worst could be over

World crude steel production tumbled in the first quarter as recession knocked down steel demand and although no quick-fix is on the cards, analysts predict the worst is about to be over.

 

But such a stabilisation and a recovery is set to vary by region, experts say.

 

Output in Germany, Europe's biggest producer, is seen down more than 25 percent for the whole year, the country's steel federation said, adding the bottom would be reached in the second half.

 

Steel production fell to 264 million tonnes in the Jan-March period, posting a drop of 22.8 percent year-on-year, figures showed on Tuesday from the World Steel Association, which represents around 85 percent of the world's total steel output.

 

Global recession slashed consumption in key steel consuming industries such as autos and construction, while steelmakers had to axe output, cut jobs and shelve investment plans.

 

But some analysts see the first quarter figures as the bottom of the trough and predict better figures for April and the following months.

 

"The ex-China market troughed in January and it has picked up in February and March on a day-count basis. I think that will continue; April will be better," said analyst Michael Shillaker at Credit Suisse.

 

In March global steel output totalled nearly 92 million tonnes, which indicates just below 3 million tonnes of daily production, almost unchanged from February's 3 million tonnes.

 

In January output per day was around 2.78 million.

 

China, the world's top producer, posted a rise of 1.4 percent in the first quarter to produce 127.4 million tonnes, while all other major steel producing countries showed a fall in the same period.

 

In March, output in the European Union tumbled by 45.3 percent, with top two producers Germany and Italy down 49.8 percent and 42.7 percent respectively.

 

One of the hardest hit, the picture looked grim in the Europe's biggest producer Germany, as its steel federation said the current data did not suggest a recovery and predicted output to fall to levels not seen since the early 1960s.

 

"We expect a decline of more than 25 percent for 2009," Federation President Hans-Juergen Kerkhoff said. Last year's output in Germany -- the world's seventh-largest steel producer -- stood at 45.8 million tonnes.

 

The federation said in a statement new orders in January and February declined by over 50 percent compared with year-earlier levels and indicators showed the situation was not expected to improve in the second quarter.

 

De-stocking among traders and processors is taking longer than originally expected due to the worldwide economic slump, it added.

 

Amid shrinking demand from construction and automotive industries, steelmakers such as ThyssenKrupp, ArcelorMittal and Salzgitter have already slashed output in the country, where five out of a total 15 blast furnaces have been shuttered.