Steel Industry and Project Developers on Alert for "Green Shoots" of Recovery

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Researched by Industrial Info Resources (Sugar Land, Texas)--Searching for the much sought after "green shoots" of recovery in the currently depressed conditions of the world economy might seem, to some, to be a manic pastime. But there is evidence that the massive flywheel effect of the project boom in the beginning years of this decade, as well as the domestic drivers in China and India have maintained enough impetus to keep industrial activity going and project developers alert to opportunity. Industrialists in developing regions are looking to catch, or perhaps create, the beginning of the upturn by end of 2009 or the beginning of 2010. The course of the steel industry provides some means of gauging current and future project development.

The World Steel Association (Brussels, Belgium) reported that steel production of 89 million tons for the 66 member countries in April 2009 was 23.6% down for the same month last year. For the first four months of 2009, global production was 354 million tons, down 22.7% year over year. But China's massive 43.4 million-ton drop in production for April only represented a 3.9% drop from April 2008. For the first four months of the year, China produced 171 million tons of crude steel, an increase of 0.1% that demonstrates ongoing internal demand. For the same four-month period, production in both Germany and the U.S. dropped more than 53% year over year, and the E.U. showed a drop in production of 44.2% for the first four months of the year.

Driven by the consuming sectors and the clearing of inventories, Indian steel production rose by about 4% in April, and Tata Steel Limited (BSE:500470) (Mumbai) registered double digit growth, the Economic Times reported. Steel producers Steel Authority of India Limited (BSE:500113) (New Delhi) and Reliance Industries Limited (BSE:500325) (Mumbai) both showed a 2.6% decline in production for the month.

Taking a dipstick test of the global industry in the first half of May, there are signs of a possible pick-up in production. In Ukraine, where heavy industry has had a dour slog over the past year, the local association of metal producers Metallurgprom reported that in the first 11 days of May output increased by 5% over April, and crude steel output is expected to hit 2.42 million tons in June, compared to 2.14 million tons in April. Also in the first 11 days of May, pig iron production rose 5.3% over the same period in April.

In Japan, stainless steel manufacturers saw an increase in enquiries in April and by May were reporting a "flood" of enquiries. In China, the major stainless producers have resumed full operations driven by an improved market for nickel-based cold-rolled sheets. In East Asia, export prices for nickel-based cold-rolled sheets have increased by as much as $300 per ton, and further increases are anticipated for July shipments from Japan.

In India, post-general election hopes for increased boosts to infrastructure spending could see steel orders from the construction industry driving a 6% gain in overall sales this fiscal year. Tata Steel is expecting a 25% surge in domestic sales in 2009-10. The company's saleable steel output grew 11% year over year in 2008-09, and crude steel production rose 13%. The managing director of Tata Steel, Balasubramanian Muthuraman, told CNBC that although there were signs of revival in India, he did not foresee a global revival of steel production and consumption based on the statistics coming from the World Steel Association.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.