RECORD HIGH LEVELS OF IRON AND STEEL PRODUCTION FORECAST FOR 2010 AND 2011

MEPS remains quite upbeat about the prospects for global iron and steelmaking this year and next. World steel output is predicted to reach 1395 million tonnes in 2010 - up by 14 percent on the year earlier figure. A further expansion of 3.9 percent is anticipated in 2011.

The bounce back in global steel mill activity this year will be strongly influenced by the recovery in industrialised countries of the world. The economic crisis in the West in 2009 resulted in their share of global steel output falling to just 25 percent. This year, the figure will climb to near 28 percent.

We should not forget, however, that the emerging and developing nations will contribute around 100 million tonnes (57 percent) of the rise in steel production this year. This amount will increase in the future as the proportion of construction activity in GDP growth drives up apparent consumption of steel per capita in these countries.

Global production of steel during the first quarter of this year was almost 1.5 million tonnes above the figure in the equivalent period in the boom year of 2008. Indications so far from the April/May output suggest that second quarter steel manufacturing in 2010 will be approximately 4.5 million tonnes above the tonnage produced in the same trimester, two years earlier.

The daily steelmaking rate is forecast to slip during the second half of 2010. However, the decrease is not expected to be on the same scale as the collapse experienced in the last six months of 2008. The global economy is, currently, in much better shape than in the latter half of 2008.

The above factors are those leading us to predict an "all-time" record high steel production figure this year.

Steel output in the EU-27 picked up quite dramatically in the second quarter of 2010. Consumers placed orders with the mills earlier in the year as they were faced with rising prices due to a major hike in raw material costs. Both end-users and distributors built up their inventories towards the middle of the year. This will result in lower activity at the steel plants in the second half.

Steel output in non-EU Western Europe is still expected to climb to 31 million tonnes in 2010. This equates to an increase of 6.4 percent, year on year. Further growth is anticipated in 2011 as recent investment projects expand to their full potential.

Crude steel production in the CIS should expand to near 105 million tonnes in 2010. Further gains are anticipated in the following year. Domestic demand for construction has started to recover in Russia but in Ukraine it remains rather sluggish.

Liquid steel production in the NAFTA region improved significantly during the first half of 2010. However, demand is now weakening. Consequently, output will slow down in the final six months, to end the year at just above 107 million tonnes - 30.1 percent up on the year earlier figure.

South American steel output is forecast to expand in 2010 to near 43 million tonnes - up 12.7 percent on the year earlier figure. Further substantial growth is anticipated for 2011 but this tonnage is likely to fall short of the peak volume in 2007.

Modest growth in steel production is predicted for the African continent in 2010. Further but steady improvement is also anticipated in the following year.

Steelmaking in the Middle East is booming. New capacity is available. Production of crude should climb to near 21 million tonnes in 2010 - almost 20 percent up on the year earlier figure. A further substantial increase is anticipated in 2011.

Total Asian steel production is expected to escalate by 95 million tonnes in 2010, year on year, to a figure just below 895 million tonnes. This will be another record outturn - the twelfth successive annual increase. Further growth is anticipated in 2011 but at a much slower pace than in recent years.

Source: MEPS - World Steel Outlook Quarter 2 2010