Worldsteel Association (WSA) reports that global crude steel production totaled 145.25 million tonnes (Mt) at a capacity utilization rate, (CUR) of 73.0% in October. On a year on year, (y/y) comparison, global crude steel production in October increased by 8.73 Mt as the capacity utilization rate rose 4.5 percentage points.
On a three month moving average, (3MMA) basis the rate of annualized production rate through October was 1,743.0 Mt. WSA estimates that current global capacity stands at 2,388 Mt, thus, the annual excess global capacity at current operating rates is approximately 645.0 Mt. For the ten months ending October total worldwide raw steel production totaled 1,418.86 Mt, up 78.26 Mt year to date y/y or 5.9%.
Figure 1 charts global steel production on the right-hand Y axis and percent CUR on the left-hand Y axis. Both capacity utilization and crude steel production are trending sharply higher year to date, (YTD) 2017.
Figure 2 shows a pie chart of raw steel production by region YTD, through October 2017. China with 711,833 Mt YTD, +5.7% y/y accounts more than half, (51.0%) of global raw steel production. The next biggest slice was “other Asia” with 264,803 Mt or 19.0% of the global total. Countries in “other Asia” include: India, Japan, South Korea, Pakistan, Taiwan, Thailand and Vietnam. Adding China + other Asia, accounts for 70.0% of global steel output.
Europe was the next largest producing region YTD with 174,634 Mt, accounting for 12.5% of the global total. The CIS countries (Byelorussia, Kazakhstan, Moldova, Russia, Ukraine and Uzbekistan) combined tonnage was 85,251 Mt YTD for 6.1% of the total. South America accounted for 36,210 Mt, 2.6% of the global total. Africa accounted for 27,166 Mt, 1.9% of the global total.
North America (which includes Canada, US and Mexico as well as Cuba, El Salvador, Guatemala, Trinidad & Tobago), produced a combined 96,463 Mt, accounting for 6.9% of global output. North Americas’ share of global output moved-up 1.0 percentage point y/y.
The good news is that the U.S. produced 7.0 Mt of crude steel in October 2017, an increase of 12.0% compared to October 2016.
The World Steel Association, Short-Range Outlook, (SRO) for apparent steel consumption in 2017 and 2018 was released on October 14th. Its global raw steel production forecast for 2017 was revised sharply upward from its April SRO of 1,535.2 Mt, to 1,622.1 Mt, an 86.8 Mt increase. For 2018, the WSA SRO calls for raw steel production to increase to 1,648.1 Mt, a 1.6% y/y increase. In its commentary WSA stated that it sees the world in its – “best balance of risks since the 2008 economic crisis.
At Gerdau we keep a keen eye on Global crude steel production and capacity utilization because of its huge impact on global trade and its influence on domestic pricing.