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World Steel Production Report

ISSB Monthly World Steel Production Review

WORLD STEEL REVIEW, September 2011

Production of crude steel in July for the 64 countries reporting to the World Steel Association was estimated to be 127.5 million tonnes, an increase of 11.5% over July 2010. The total for the first seven months of 2011, however, showed a rise of 8.3% to 887 million tonnes. All regions showed a rise in crude steel production in both the month and year to date apart from Africa. If China is excluded from the total, the July increase was 8.2% and the seven months total rose by just 6.6%.

In the European Union 27, crude steel production rose by 5.9% in July to 14.6 million tonnes compared to July 2010; total production for the seven months to date was only 4.3% up on the previous year's total at 108 million tonnes. German crude steel production increased by 5.7% in July, bringing the year to date total up 2.5% to 26.9 million tonnes. However, Italy's steel production rose by 14.5% in July, while the seven months total increased by 10% to 17.3 million tonnes. Spain is the third largest steel producer in the EU but production fell by 1.9% in July, and by 0.9% in the year to date to just under 10 million tonnes. French production fell by 7% in July, while the seven months total decreased by 2.1% to 9.3 million tonnes. UK steel production, on the other hand, rose by 7.5% in July, although the year to date total was virtually flat at 5.9 million tonnes.

Among the other EU members crude steel production for the year to date increased by 12.4% in Greece, 10.4% in the Netherlands and 7.2% in Poland. In the rest of Europe, Turkey's steel production jumped by 19.3% in July, bringing the year to date total up 21% to 19.3 million tonnes, about one million tonnes less than the Ukraine. Serbia's seven months total rose by 22.8% to 918 thousand tonnes.

In the CIS countries Russian production rose by 8.1% in July, bringing the year to date total to 40.7 million tonnes, 6.1% up on the previous year. Ukrainian crude steel production, however, increased by 10.3% in July, while the year to date total rose by 6.6% to 20.4 million tonnes. The other significant steel producer, Kazakhstan, showed an increase of 18.5% in production in July, bringing the year to date total up by 21.5% to 2.9 million tonnes.

On the North American continent US crude steel production rose by 10.2% in July to 7.5 million tonnes, bringing the seven months total up by 5.2% to 50.1 million tonnes. Canadian monthly production fell by 1.5%, with the year to date total 4.4% higher at 7.9 million tonnes. Crude steel production in Mexico, however, increased by 26% in July, making the year to date total 13% higher at 10.9 million tonnes compared to the first seven months of 2010, about one million tonnes more than Spanish production.

US imports of steel reached a peak of nearly 2.8 million tonnes in May 2011, and then dropped slightly to 2.5 million tonnes in June. Both these totals were the highest monthly totals since October 2008. Semi finished steel and tubes each accounted for 23% of total imports in 2011. In terms of the source of US imports, Canada supplied 21% in 2011, followed by Mexico with 11% and South Korea at 10%, which was a significant increase on its exports the previous year. Brazil also showed a steep rise in exports to the USA at 9% of total imports in 2011. Almost one third of the ingots and semis imported by the USA in 2011 came from Brazil, with 15% from Russia and 14% each from Canada and Mexico. Nearly 20% of the tubes and pipes came from South Korea with a further 15.7% from Canada. Mexico was the third largest supplier of tubes and pipes at almost 9% of imports in 2011 and India close behind at 8%.

In South America Brazilian steel production was 8.2% higher in July, while the year to date total was 8.7% up at 20.9 million tonnes. Production in Argentina increased by 10.9% in July, and by 10.8% in the seven months to 3.2 million tonnes. Venezuelan steel production, on the other hand, increased by 39% in the month, bringing the year to date total up 99% to 1.9 million tonnes. Chile's seven months total more than doubled to nearly 1.1 million tonnes. Brazilian steel exports in the first seven months of 2011 were 35% up on the same period in 2010 at 6.5 million tonnes. However, 63% of the exports in 2011 were semis, of which about one third went to the USA (1.3 million tonnes) and a further 30% to Asian countries. There was also a significant rise in the exports of semis to Germany in 2011, some 691 thousand tonnes, or 17% of the total exports of semis.

Turning to Africa and the Middle East, Iranian production jumped by 26.6% in July, bringing the year to date total up 13.5% to 7.7 million tonnes. South African production, however, fell by 4.6% in July, with the seven months total down 20% at 3.8 million tonnes. Egypt's seven months total, on the other hand, was 2.2% higher at 3.8 million tonnes, while Saudi Arabian year to date production increased by 4.2% to 3.1 million tonnes.

Crude steel production in China increased by 15.5% in July, bringing the year to date total up by 10.3% to 410 million tonnes, 46% of world steel production. Japanese steel production, however, was down by 1.2% in the month, and by 1% in the first seven months to 63 million tonnes. In India production increased by 6.3% in July, and by 5% in the year to date to 41.8 million tonnes. South Korean steel production rose by 21.7% in July, with the seven months total up 19% at 39.5 million tonnes. Taiwanese crude steel production increased by 13.7% in July and by 19% in the year to date to 13.5 million tonnes. Australian year to date production fell by 3% to 4.1 million tonnes.

Although the price of scrap has been reasonably stable over the last few months, it has increased substantially compared to 2009. Turkey is the largest importer of scrap in the world and the average cost of general shredded scrap in May 2011 was only 7% higher than in May 2010, but 90% higher than in May 2009. The reported import price in May 2011 was US$452 per tonne which was a slight decline from the peak price of US$469 in March 2011. A similar import price was reported in Spain in May 2011, US$448 per tonne, but this was 23% higher than in May 2010 and 90% higher than in May 2009. South Korea is the second largest importer of scrap in the world, and in June the average price of general shredded scrap was US$491, which was 10% higher than June 2010 and 87% above June 2009. This was, as in the case of Turkey, a slight drop on the price in March 2011 of US$501.

Phil Hunt
ISSB Ltd



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