Global Steel Industry Poised for Recovery Following Tough First Half of 2009

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Researched by Industrial Info Resources (Sugar Land, Texas)--The global steel industry faced a tough time in the first half of 2009, with the worldwide financial crisis causing industrial production in many regions to decline considerably, particularly in the first quarter. However, recent statistics show signs that the industry may be on its way to recovery.

Some countries--notably Japan, Italy and Turkey--registered declines as high as 20% in production during the first three months of the year. In contrast, China recorded an increase in industrial production of almost 6% in the same period. The International Monetary Fund has revised its world economic forecast to a 2.5% growth in 2009, following the gloomy prediction of a 1.3% decline it issued in April.

Steel production, following relatively flat worldwide production figures for the first quarter of 2009, has shown a slow but gradual increase in the April to July 2009 period, rising from 89 million tons in April to almost 104 million tons in July.

China continues to record significant growth in its economy and reflects the global trend in increased steel production during the April to July 2009 period, with figures of just more than 43 million tons in April rising to almost 51 million tons in July. Unlike many western countries, the motor vehicle industry in China recorded a 38.8% growth during the first half of 2009, largely on the back of government incentives and cuts in sales taxes.

Other countries in the Asian region for the most part have not followed the Chinese trend. India and South Korea have both recorded relatively flat steel production figures, with figures for India ranging from a low of 4.1 million tons in February to a high of 4.7 million tons in March, and those for South Korea ranging from 3.2 million tons in February to 4.2 million tons in May.

The steel industry in Japan hit a low in February this year when it recorded a production of 5.5 million tons. However, steel production increased to 7.7 million tons by July, with inventory of ordinary steel products declining between December 2008 and April 2009, before picking up in May and June 2009.

The decline in the United States appears to be slowing down, with many sectors reporting slight improvements from June to July this year. The new orders index in the manufacturing sector rose from 49.2% in June to 55.3% in July. Steel production in the U.S. appeared to follow this trend, rising from 4.3 million tons in June to almost 5 million tons in July.

After a poor first quarter, Europe's largest steel producer, Germany, began to show an increase in steel production after a low of 1.9 million tons in April, recording a gradual rise over subsequent months to reach 2.7 million tons in July.

It also appears that the various stimulus packages introduced by governments to counteract the global economic crisis have had little effect on steel production figures. This is largely because the packages initiated by the governments were aimed at the construction, automobile and infrastructure areas. Although these packages have the potential to benefit the steel industry, the stimuli will take time to reflect as increased demand for steel.

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