OECD Steel Committee, December 2010

Recent steel market developments

Global steel demand during the third quarter of 2010 reached an annualised rate of 1.4 billion tonnes (6% higher than the pre-recession level seen during the second quarter of 2008). Production amounted to about 1,046 million tonnes during the first nine months of 2010, up by almost 20% compared to the same period in 2009.

Asian countries, particularly India and China, emerged rather quickly from the recession due to infrastructure oriented stimulus packages and strong internal demand, whereas the effect of the crisis was more adverse on the European and the NAFTA steel industry. As a result, these economies took longer to recover.

Steel demand in Asia is currently 17.6% higher than pre-recession levels. In particular, Chinese demand is about one-third above the pre-recession level. Contrary to this are developments in many developed market economies where steel consumption is still below pre-recession levels.

Regarding production, global steel output has been on an upward trend from January 2009 to May 2010, pushing up the steel capacity utilisation rate significantly. Production was up in North America and in the European Union but from a very low base. From May to September 2010, on the other hand, global steel production declined again largely due to a weakening of demand as well as temporary production cuts linked to energy measures in China. The solid upward momentum of steel consumption, driven by expanding manufacturing activity together with a strong increase in raw material prices, contributed also to higher prices although in May 2010 the world average was still 31% below the peak level witnessed in mid-2008. This upward price trend came to a halt in May 2010 when demand prospects began to moderate.

For full report, see attachment.