GLOBAL STEEL PRODUCTION FORECAST TO RISE BY 94 MILLION TONNES IN 2007

World crude steel output is now forecast to reach 1337 million tonnes this year. This represents a 7.5 percent increase on the 2006 figure.

Continued buoyant demand in all parts of the globe, with the exception of North America, have prompted us to slightly upgrade our forecast in this issue.

Blast furnace iron production is now predicted to rise to 943 million tonnes - up 7.9 percent on the outturn in the previous year. This is above the rate of increase in crude steel because of the high proportion of extra output from China, which is dominated by the blastfurnace/oxygen steel manufacturing process.

We now expect output of direct reduced iron to be 63.6 million tonnes in 2007. This equates to a gain of 4.8 percent on the value recorded in the previous year.

The migration of steel production to the Asian continent is reinforced by the fact that 83 percent of the rise in steelmaking in 2007 will be supplied from this region. Mills in the former USSR and South America are also expected to make major contributions. Whilst the NAFTA region will be the only area to record a decrease.

Strong demand from the EU construction sector has been instrumental in providing a platform for increased activity in the steel industry in the first half year. In most countries, this development is expected to continue for the whole of 2007.

MEPS (International) Ltd forecasts a 2.5 percent rise in steel manufacturing across the EU-27 this year. This represents a gain of more than 5 million tonnes. We envisage 4 million tonnes being supplied by mills in the EU-15 member states - another record outturn. Recent entrants from Eastern Europe are expected to contribute the remaining 1.1 million tonnes.

Strong steel production growth is forecast for the remainder of non EU Europe. New capacity installations are pushing output higher in Turkey and many East European states. We forecast growth in 2007 at in excess of 13 percent in the sub region.

Our forecast for crude steel output in 2007 in the former USSR has been slightly uprated in this issue to just above 125 million tonnes. Firm demand from Russia is benefitting all countries in the region.

Crude steel production in the NAFTA region is forecast to decline by 3.3 percent in 2007 compared to the outturn in the previous year. Real demand is sluggish in the United States and Canada.

We predict South American crude steel production in 2007 will increase by 4.2 million tonnes. Consumption is expanding rapidly across most of the region as economic activity improves.

African crude steel output in 2007 is expected to be slightly above the figure recorded in the previous twelve months.

Steel production in the Middle East is expected to rise in 2007 by 4 percent. All the expansion will be utilised to meet local requirements. In fact, regional demand is growing faster than output.

Asia continues to be the powerhouse of production for the steel sector around the world. Demand remains extremely strong across most of the region. Steel output gains are being put in place in all the major manufacturing nations. We now envisage total Asian steelmaking in 2007 approaching 750 million tonnes. This equates to a 142 percent rise in the past ten years.

A modest improvement in steel output is envisaged this year in the Oceania region. Stronger domestic demand was noted in the first half. Export sales may, however, be slower in the last two quarters.                                                                                                 23.07.2007

Source: MEPS - World Steel Outlook.               Click here for latest Iron and Steel Forecasts.