We expect world crude steel production to
expand by 6.8 percent this year - up by 76.5 million tonnes on the
outturn in 2004. This figure represents a decline in the rate of
growth in output during the second half as demand from customers in
many parts of the globe continues to decrease.
The inventory building phase is complete.
We are now in a stock drawdown situation. Prices for most steel
products have collapsed due to over supply. Further reductions are
inevitable until supply and demand move nearer into balance.
At the five month stage, steel making in
the world was up 8.2 percent, year on year. A number of mills have
already announced action to curtail supply. Unfortunately,
significant amounts of new capacity have come on stream recently.
Steel producers are always reluctant to curb output just at the time
they had planned to benefit from increased tonnage.
In the European Union, several
major steel makers have made announcements of further cuts in
production in the second half of the year. With these stated
intentions, we have downgraded our forecast for total output in this
year to 187.8 million tonnes - a reduction of 3 percent on the 2004
figure. Inventory building took place in both the flat and long
products segments. We predict a decline in blastfurnace iron
production from almost 111 million tonnes last year to just above
108 million tonnes in 2005.
Steel making in non-EU
European nations is expected to reach almost 32 million tonnes in
2005 - less than one percent up on the figure in the previous twelve
months. The main driver for this improvement is the Turkish steel
sector. In many other countries modest decreases are anticipated.
Our forecast for this year’s
steel output in the countries making up the former USSR is just
below 112 million tonnes. This equates to a no change situation
compared to 2004. The Russian steel sector is propping up supply
from this region.
North American steel
manufacturing is starting to slip. Customer demand is sluggish. The
mini mills have short delivery lead times due to lack of orders,
resulting from the excessive inventories built up by customers over
the last nine months. The second half of this year will be a
difficult time for the steel makers. We forecast total output for
the year falling to around 130 million tonnes - down 3 million
tonnes on the year earlier figure.
Steel output in South America
is likely to move up by around 0.3 million tonnes (1.5 percent) this
year compared to 2004. Export sales are weakening - particularly for
semi-finished products. A small decrease in production is
anticipated for the second half.
African steel production is
forecast to rise to almost 18 million tonnes this year - up 7.5
percent on the 2004 outturn. The second half is likely to be less
buoyant than the first as those countries dependent upon exports
find markets more difficult to secure. The year on year gains at the
five month stage were 10.6 percent.
Steel output in the middle
East should expand to 15.5 million tonnes in 2005. This equates to
an increase of 8.7 percent year on year. Most of the growth is based
on higher local demand.
Asian steel production is
likely to reach, almost 573 million tonnes this year. This
represents almost 47 percent of global output and will have grown by
77 million tonnes in 2005 (15.5 percent). This is mainly the result
of higher production in China.