/Rusmet.ru, Victor Tarnavskiy/ World Steel Association (WSA) has stroke the balance of global metallurgy in April 2010. In 66 countries, which provide their statistics to the Association 121.65 mio tons of steel was produced, which was down 0.4% below March, but up 35.7% on April 2009.
In four months global steel output volumes reached 465.5 mio tons, according to WSA, which was up 31.3% on the same period of last year and up 1.8 % on Jan.-Apr. 2008. Thus, steel output exceeds the before-crisis volumes. According to WSA estimations, the capacities load reached in April 83.4 %, which is the highest figure since April 2008.
The results are reached mostly at the cost of China. In the first four months of 2010 steel output in China amounted 213.3 mio tons, which was up 25.8 % on the same period of 2008. The rest of the world is still behind the 2008 figures by 12.3%. Among the large manufacturers only India, Taiwan, Iran, and Saudi Arabia exceeded their 2008 results. In the EU-27 in Jan.-Apr. 2010 steel output was down 19.7% below 2008, in the USA - 22.0%, in Japan - 13.4%, in Russia - 15.6%, and in Ukraine - 24.8%.
Nevertheless, if to compare this year results with the crisis peak (Jan.-Apr. 2009), the figures would be different. Thus, in Jan.-Apr. 2010 steel output in EU was by 44% more than a year ago, in the USA - by 67.3%, and in Japan - by 52.2%. In Russia and Ukraine the difference is 23-24% and in Turkey - 11.2%.
Steel output boost in the world was in March 2010 (from 108.3 mio tons in February to 122 mio tons in March). Steel output in April was below March. However, due to fewer working days in April as compared with March, average daily steel output grew and exceeded 4.0 mio tons for the first time in the history. Last month world steel output corresponded with yearly output of 1.5 bn tons, 675 mio tons of which fell on China.
It is obviously today, that steel producers increased the output in March-April too fast. In recent several weeks there is excessive supply in all main markets. Due to enough stockpiles the consumers are waiting and the manufacturers have to decrease the prices. Rebar and HRC prices un Middle East decreased by 15-20% by the second half of May, as compared with the peak in the beginning of April. By all appearances the prices will decrease further. Meanwhile, raw materials prices keep high. It will worsen the situation of steel manufacturers and will make them to review their policy.
Some companies have already said that they will have to reduce the outputs due to the sales issues. In particular, Ilyich Steel Works of Mariupol (Ukraine) said that it will decrease steel and rolled products output by the end of May by 10%. For this it can stop three of four open-hearth furnaces. The US branch of ArcelorMittal will stop its two blast furnaces at Indiana Harbor East mill in early August. A furnace repair works have been suspended at Indiana Harbor West. Some Chinese companies in early May mentioned possible reduction of steel output.
By all appearances the misbalance in global steel market will be not easy to correct. In summer the demand for steel products usually is not high. Besides, the economical situation in the EU and the USA remains negative. The consumers and distributors are unlikely to invest in new stockpiles soon. The existing stockpiles are enough till autumn.
Obviously in the nearest future the sales volumes in global steel market will keep low and the prices will continue to decrease. To restore the supply-demand balance the manufacturers have to decrease the capacities load at least till the level of Jan.-Feb. 2010 and even less.