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Posts Tagged ‘World Steel Association’

World Steel Association: World crude steel output increases by 15% in 2010

January 27, 2011 Comments off

“World crude steel production reached 1,414 million metric tons (mmt) for the year of 2010. This is an increase of 15% compared to 2009 and is a new record for global crude steel production. All the major steel-producing countries and regions showed double-digit growth in 2010. The EU and North America had higher growth rates due to the lower base effect from 2009 while Asia and the CIS recorded relatively lower growth.

Annual production for Asia was 881.2 mmt of crude steel in 2010, an increase of 11.8% compared to 2009. Its share of world steel production increased to 65.5% in 2010 from 63.5% in 2009. China’s crude steel production in 2010 reached 626.7 mmt, an increase of 9.3% on 2009. China’s share of world crude steel production declined from 46.7% in 2009 to 44.3% in 2010.”

Source: World Steel Association, January 21 2011

Observations:

  • Annual steel production has increased to a new record, fully recovering from the reduced production in 2009. This reduction was fully caused by production outside China. Chinese production has increased every single year for the past decade.
  • The new iron ore pricing system leads to complaints about higher raw materials costs with many steelmakers (current spot price at $175/tonne). The recent spike in coal costs (currently up to $350/tonne) further reduces the margins of the steel makers. American producers are posting significant losses.

Implications:

  • Focus of the industry is on the new tax policies to be introduced in China to cool down the economy. Increased consumer prices of steel might have a significant impact on the growth rate of the Chinese industry, starting in the second half of 2011.
  • Across the world the increased prices of raw materials will be passed on to customers, as the mining and transportation costs are not likely to return to the levels of early 2009 with global supply conditions.

©2011 | Wilfred Visser | thebusinessofmining.com

World Steel Association expects record 2010

October 5, 2010 Comments off

“Stronger-than-expected increases in steel demand in Europe, Japan and the former Soviet Union are propelling the global steel industry to a robust recovery this year, according to forecasts released by the World Steel Association. The association – the main trade body for the sector – said on Monday that global consumption of the metal would increase by 13.1 per cent in 2010 to a record level, above a forecast of 10.7 per cent made in April.

Next year demand for all grades of steel – the most widely used industrial material, which goes into a range of sectors from cars to toy manufacturing – is likely to rise by a more modest 5.3 per cent to hit a fresh record of 1.34bn tonnes.”

Source: Financial Times, October 4 2010

Observations:

  • Last week both the CEO of ThyssenKrupp and the head or the iron ore division of Vale announced similar expectations about the demand for iron ore. Vale expects the price of ore to remain high, although analysts expect the price to drop by approx. $15/t.
  • In June of this year various steel producers warned for potential overcapacity in the industry, caused by low growth expectations for China. However, most steel makers have gained confidence that the risk of a double dip recession is limited.

Implications:

  • This year’s change of the iron ore pricing mechanism to a system linked to the spot price of the ore is an incentive to business leaders to try to influence the spot price. Published expectations on the demand and supply of ore and steel by various companies can be seen as part of the game of influencing the price and the strategy of suppliers and customers.
  • The effect of announcing high demand expectations by steel makers works in two directions: it is a signal to the mining industry to step up production, which causes price of ore to drop in the long run; at the same time it might increase the price of ore in the short term as demand drives the price up.

©2010 | Wilfred Visser | thebusinessofmining.com