Steel output closes in on billion tonne target

Edited by the Engineeringtalk editorial team Aug 5, 2004

Production figures for the first half of this year show that crude steel output remains on track to exceed 1 billion tonnes in the whole of 2004 for the first time.

Production figures for the first half of this year show that crude steel output remains on track to exceed 1 billion tonnes in the whole of 2004 for the first time.

The recent slowdown in China's rate of growth will not seriously imperil this target unless it deteriorates drastically in the second semester.

The International Iron and Steel Institute's latest figures put crude steel production in January/June at 503.3 million tonnes.

These statistics cover countries accounting for over 95% of global output.

MEPS is currently forecasting a full-year figure of 1016 million tonnes, assuming a modest slowdown in China.

In some sectors of the Chinese steel market there has been a quite dramatic scaling back of growth rates.

In May, official figures indicate that consumption of light long products was less than 5% ahead of the previous year.

This shows the construction sector, which accounts for more than half of Chinese steel consumption, is bearing the brunt of government efforts to rein back excessive expansion.

One of the consequences has been a sharp increase in steel exports from China, as mills seek alternative outlets for products such as hot rolled coil, bar and rod.

In the first five months of 2004, foreign sales of finished products were almost 20% higher than in the same 2003 period.

One report puts the figure in May at nearly 1 million tonnes, the highest monthly figure on record.

China's crude steel output overall is still showing impressive year-on-year growth.

But from the 20/25% rate of expansion attained in the first few months of 2004, June's rate fell sharply.

The month's production of almost 21 million tonnes was less than 14% higher than in June 2003.

This is still well above any other major producing country.

Elsewhere, there are signs of the steel production gains becoming constrained - partly by capacity limitations and partly by raw material shortages.

Thus, India's June crude steel making was only 1% higher year-on-year as some of the country's integrated mills struggled to find adequate supplies of coal and coke.

In Japan, despite booming demand for steel in neighbouring countries and a recovery domestically, June crude steel making was only 0.9% ahead of the same 2003 month.

In much of Europe and North America it is basically flat or only marginally higher than in 2003.

Even if supply growth falters in some parts of the world, others are continuing to advance.

In resource-rich Brazil, a strong upturn in the domestic economy has seen steel production rise more than 5% so far this year.

A greater proportion of output is being directed away from exports towards meeting domestic demand, which is forecast to rise by up to 10% this year.

Other Latin American countries such as Mexico and Venezuela are also doing well.

Others contributing to the 2004 record level of steel output are Turkey (up 12%), Iran (up 7.2%) and the states of the former Soviet Union whose combined production so far this year is 6.6% ahead of 2003.

However, they carry far less weight than China, which in January/June has added almost 22 million tonnes to its crude steel production compared with last year.

Its share of world output is now close to 25%, up from 22 percent in the first half of last year.

One recent rather optimistic forecast is that China's long-term sustainable rate of annual steel making could be as much as 500 million tonnes.