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Researched by Industrial Info Resources (Sugar Land, Texas)--Globally, steel manufacturing companies are developing $349 billion in capital projects, according to Industrial Info's Global Project Intelligence Platform. Not surprisingly, the two countries with the largest of amount of planned infrastructure spending, China and India, account for more than half of the value of planned capital projects globally.
China's overbuilt steel manufacturing industry, with capacity of about 1.2 billion metric tons of steel and production of 820 million metric tons in 2016, continues to grow. This comes in spite of the Chinese government's planned cuts and mill closures in response to antidumping efforts led by the U.S. and European Union nations. China has initiated cuts and mill closures that will result in the layoff of 5 million to 6 million workers in the steel and coal industry over the next few years. China's government will spend $23 billion over the next few years to cover layoffs. This effort could take 100 to 150 million tons of steel-making capacity out the market.
China continues to build steel mills, even as it closes older inefficient producers. China is developing 102 projects, totaling $62 billion, to increase capacity, either through expansion of existing mills, or grassroot construction. For example, Shandong Iron and Steel is currently constructing a $6.7 billion grassroot mill in Rizhao, China, in Shandong province. It is designed to produce about 8 million tons per year when completed at the end of 2017.
In India, steel demand is expected to grow from the ports, oil & gas, power and construction sectors as the infrastructure build-out continues. India's prospects are brightening due to low oil prices, government reform momentum and policies to increase infrastructure and manufacturing output. India's steel demand is expected to increase 5.4% in 2017, reaching 88.3 million tonnes. Per industry estimates, the Indian real estate market could grow to approximately $140 billion by 2017, which is likely to contribute to a significant portion of long-term steel demand. The Indian government has announced plans to grow steel production to 300 million tons by 2025. India will have to overcome a historically poor record of project red tape and permitting blockages to help some of the more than $90 billion in steel mill projects there reach the construction stage.
Global overcapacity in the steel industry remains a major influencer for capital spending in 2017; however, in the U.S., demand has improved and steel manufacturers are ramping up capacity to meet regional demand. This has resulted in a series of price increases for steel mill products. According to World Steel Dynamics, for the period February 2016 through April 2017, free on board (FOB) mill price in the U.S. rose 61% to $713 per metric ton for hot-rolled band steel.
Steel mill capacity utilization is up slightly in 2017. This is mainly due to improved demand from non-residential construction and an uptick in oil & gas development, including drilling rig activity.
While capital expenditures remain muted, some steel firms are moving forward with major projects. Steel manufacturers are developing $10 billion worth of projects in the U.S., according to Industrial Info's Global Project Intelligence Platform.
For example, Charter Steel Company (Saukville, Wisconsin) is planning to construct a $150 million Steel Bar Quality (SBQ) mill at the company's steel mill in Cuyahoga Heights, Ohio.
JSW Steel USA (Baytown, Texas) is in the middle of about $80 million in improvements to its steel mill in Baytown. Earlier in the month, the company's chief executive officer announced that the company is evaluating a new steel making furnace and caster at the mill. That project would be at least $150 million.
The steel industry is waiting for details on a proposed $1 trillion infrastructure spend over 10 years as promised by the Trump administration. This could boost U.S. steel consumption by approximately 5 million tons per year. Companies like Nucor Corporation (NYSE:NUE) (Charlotte, North Carolina) and Caterpillar Incorporated (NYSE:CAT) (Peoria, Illinois) would benefit greatly from the proposed infrastructure spend.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
China's overbuilt steel manufacturing industry, with capacity of about 1.2 billion metric tons of steel and production of 820 million metric tons in 2016, continues to grow. This comes in spite of the Chinese government's planned cuts and mill closures in response to antidumping efforts led by the U.S. and European Union nations. China has initiated cuts and mill closures that will result in the layoff of 5 million to 6 million workers in the steel and coal industry over the next few years. China's government will spend $23 billion over the next few years to cover layoffs. This effort could take 100 to 150 million tons of steel-making capacity out the market.
China continues to build steel mills, even as it closes older inefficient producers. China is developing 102 projects, totaling $62 billion, to increase capacity, either through expansion of existing mills, or grassroot construction. For example, Shandong Iron and Steel is currently constructing a $6.7 billion grassroot mill in Rizhao, China, in Shandong province. It is designed to produce about 8 million tons per year when completed at the end of 2017.
In India, steel demand is expected to grow from the ports, oil & gas, power and construction sectors as the infrastructure build-out continues. India's prospects are brightening due to low oil prices, government reform momentum and policies to increase infrastructure and manufacturing output. India's steel demand is expected to increase 5.4% in 2017, reaching 88.3 million tonnes. Per industry estimates, the Indian real estate market could grow to approximately $140 billion by 2017, which is likely to contribute to a significant portion of long-term steel demand. The Indian government has announced plans to grow steel production to 300 million tons by 2025. India will have to overcome a historically poor record of project red tape and permitting blockages to help some of the more than $90 billion in steel mill projects there reach the construction stage.
Global overcapacity in the steel industry remains a major influencer for capital spending in 2017; however, in the U.S., demand has improved and steel manufacturers are ramping up capacity to meet regional demand. This has resulted in a series of price increases for steel mill products. According to World Steel Dynamics, for the period February 2016 through April 2017, free on board (FOB) mill price in the U.S. rose 61% to $713 per metric ton for hot-rolled band steel.
Steel mill capacity utilization is up slightly in 2017. This is mainly due to improved demand from non-residential construction and an uptick in oil & gas development, including drilling rig activity.
While capital expenditures remain muted, some steel firms are moving forward with major projects. Steel manufacturers are developing $10 billion worth of projects in the U.S., according to Industrial Info's Global Project Intelligence Platform.
For example, Charter Steel Company (Saukville, Wisconsin) is planning to construct a $150 million Steel Bar Quality (SBQ) mill at the company's steel mill in Cuyahoga Heights, Ohio.
JSW Steel USA (Baytown, Texas) is in the middle of about $80 million in improvements to its steel mill in Baytown. Earlier in the month, the company's chief executive officer announced that the company is evaluating a new steel making furnace and caster at the mill. That project would be at least $150 million.
The steel industry is waiting for details on a proposed $1 trillion infrastructure spend over 10 years as promised by the Trump administration. This could boost U.S. steel consumption by approximately 5 million tons per year. Companies like Nucor Corporation (NYSE:NUE) (Charlotte, North Carolina) and Caterpillar Incorporated (NYSE:CAT) (Peoria, Illinois) would benefit greatly from the proposed infrastructure spend.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
