Global crude steel production touched a new record in 2010, driven by growth in emerging regions and improving manufacturing in the developed world, although the construction sector remained gloomy.
Global production rose 15% to 1.414 billion tonnes in 2010 from 1.327 billion in 2008 and 1.229 billion in 2008, according to data released by the World Steel Association on Friday:
Global crude steel production
“The production data is better than people could expect in the aftermath of the crisis in 2009”
said Anthony de Carvalho, administrator on the steel committee at the Organization for Economic Co-operation and Development (OECD).
“The economic stimulus programmes (undertaken by governments) indirectly helped the steel industry. But many countries are still below pre-recession levels”.
Asia and other developing countries drove the growth and reached record production levels, while output in Western economies lagged behind 2008's levels as growth remained fragile and the construction sector was hit hard, analysts said.
Production in China, the world's largest steel producer, rose 9.3 percent to 626.7 million tonnes on the previous year, but its share of global production fell to 44.3% from 46.7% in 2009.
Analysts said China's growth was strong but hampered by electricity cuts in the last part of 2010, analysts said.
“China had problems trying to meet environmental requirements”
said Peter Fish, managing director at MEPS, a steel information provider.
“But the Chinese could not grow 20% or 30% like some other countries, because in 2009, when everyone else took a dip, China didn't”.
Chinese steel production is expected to grow but at a slower rate in 2011, closer to 5% versus 7-8% growth in India, Fisher forecast.
As China's economy grows, the authorities are likely to turn to monetary policy to contain inflation, and this could affect steel demand, according to analysts.
“We do think that a tighter monetary policy in China will slow down steel consumption and this will start to kick in in the second half of 2011”
said Chris Houden, analyst at CRU.
Japan, the world's second-largest steel producer, enjoyed 25.2% growth in 2010 to 109.6 million tonnes versus 2009. Its exports have got a boost from growth in neighbouring economies such as China and Korea, according to De Carvalho.
EU and U.S. steel production grew rapidly but from a lower base. Production in the European Union grew by 24.6% to 172.9 million tonnes and in the United States by 38.5% to 80.6 million.
These countries are still struggling with overcapacity, analysts said.
“(Capacity) utilization is picking up from low levels, but the question is: Will producers keep production low to get price increases?”
said UBS analyst Andrew Snowdowne.
While steel production in emerging economies will continue to grow to record levels, it may take developed countries a few more years to go back to pre-crisis levels given the fragile state of their economies, analysts said.
The production in scale is the main vulnerability of the Brazilian steel for the competition in his own market due to the competition to have stopped being local to be global. This aspect turns necessary that the economical politics and tax Brazilian is reviewed, as well as the production. For his shift no there is as choosing as priority the internal market to the detriment of the external, or the opposite; the competition is global. Alan Greenspan in his book “the Era of the Turbulence” demonstrated that very well in the USA in the decade of 1960, when the manufacturers of automobiles had to seek new sources of provisioning:
“Until then, the United States didn't import a lot of steel, because the conventional wisdom suggested that the steel industries foreigners were not to the height of the American quality patterns. But, when the strike of 1959 reached his second and later third month, the manufacturers of automobiles and other great customers had to seek other sources of provisioning. And, then, they discovered that it leaves of the originating from steel Europe and of Japan it was of first category and, still for top, cheaper”.
The trader and lawyer Rinaldo Maciel de Freitas considers the Institute Steel Brazil, for the acronym IABr, a condominium of thieves and, in judge's Luiz Fernando Boller, o words that IABr - Institute Steel Brazil search is:
“... to impede the free market competition, confronting the Federal Constitution, reducing the free activity exercise the all allowed, even if before the submission to the rules of the competition. The opening of the national ports for imports and exports imposes their positive and negative effects on the totality of the national reality, from the production of grains and victuals in general, until the industry of the clothing, electronic etc., not having law to guarantee for the institute and their associates, a captive, submissive and slave national market, so that here he can practice the price that better it suits him” (TJSC - Tribunal of Justice of Santa Catarina - Process nº 2010.073993-7 - Judge Luiz Fernando Boller - 06/11/2010).