China Drives Global Steel Gains in June

July 20, 2011
U.S. production remains 15% off of 2008 peak.

China drove a 1.7% month-over-month global steel-production increase in June as the country continues to produce large amounts steel, even during slow economic periods, says Michelle Applebaum of Steel Market Intelligence.

June steel production rose to 4.26 million metric tons per day, slightly ahead of the typical seasonal increase of 1.5%, Applebaum said in her monthly analysis.

China's production rose 2.8% over May. The country accounted for 76% of the overall increase, Applebaum reports.

U.S. production increased 4.4%, and Africa (up 3.2%), India, Japan and the Middle East also realized gains.

But declines in other regions, including Australia where production fell 8.7% and the European Union, offset those gains.

U.S. production increases were driven mainly by existing capacity, Applebaum reports. U.S. steel industry recovery remains approximately 15% off 2008 peak levels, while global production is 7.5% higher than 2008 output.

Year-over-year global production rose nearly 8% in June, according to the World Steel Association.

China's crude steel production in June was 59.9 million metric tons, an increase of 11.9% compared with the previous year, Worldsteel reports.

U.S. production rose 1.7% to 7.2 million metric tons over June 2010, the association reports.

China's growth continues as it provides output incentives to steelmakers in an effort to grow its economy, Applebaum says.

"Even though sometimes the Chinese economy has slowed down, they've been exporting more in the last five months because they're making too much," she says. They don't seem to have the capability to power down production fast enough when the economy there slows."

In China construction steel demand has been strong, while consumer durables steel demand has been weak.

"So the efforts the Chinese seem to be having to slow down their economy don't seem to be impacting demand for construction steels," Applebaum says.

China has been trying to slow its economic growth to stave off inflation.

China will likely cut production in July and August as raw-materials prices rise, which will help reduce exports to the United States, Applebaum says. China is a high-cost country to produce steel because it imports most of its raw materials.

See also:

Emerging Markets Drive Global Steel Growth in May

About the Author

Jonathan Katz | Former Managing Editor

Former Managing Editor Jon Katz covered leadership and strategy, tackling subjects such as lean manufacturing leadership, strategy development and deployment, corporate culture, corporate social responsibility, and growth strategies. As well, he provided news and analysis of successful companies in the chemical and energy industries, including oil and gas, renewable and alternative.

Jon worked as an intern for IndustryWeek before serving as a reporter for The Morning Journal and then as an associate editor for Penton Media’s Supply Chain Technology News.

Jon received his bachelor’s degree in Journalism from Kent State University and is a die-hard Cleveland sports fan.

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