According to the World Steel Association (WSA), in may 2013, 63 countries submitting their statistical data to the organization, was produced 136.3 million tons of steel, which is a new record. However, in the last three months, the sector is operating with approximately constant capacity utilization, which in may was 79.6% vs 80.0% in the previous month. The average daily production from March to may was at the same level of 4.35 million tons per day.
In just the first five months of this year, the world had melted 658,0 million tons of steel, 2.3% more than in the same period a year ago. As before, the indicators are distributed unevenly. In China, the production volume in five months exceeded the figures of January-may of last year by 8.6%, and "other countries" declined by 3.2%. And if you do not take into account India, this figure will reach -3.8 per cent. However, the recession that lasted in the global steel market in may, shows that the current volume of output continues to be excessive.
In particular this applies to China, where in may the steel industry gave a record 67,0 million tons, representing more than 800 million tons in annual terms. However, in the first half of June, it was reported that a number of Chinese companies stopped for repairs and prevention of blast furnaces and rolling mills, but the scale of the entire state's decline in capacity utilization was insignificant. According to the national metallurgical Association CISA, over the first two decades of June, steel production in the country reached 2,155 million tons a day, which is only 2.5% behind the best performance in February of this year.
Currently, Chinese steelmakers are counting on an increase in domestic demand for steel products in the second half. Besides, they managed to achieve a slight growth of prices, which compensated for higher prices of iron ore in mid-June. Given that Chinese manufacturers are not interested in the reduction of issue that might lead to its reduced profitability, loss of market share and difficulties in repayment of debt, it is unlikely that in the near future they will start a mass order to stop their power. So, the volume of steel production in China, as well as the extent of export operations of Chinese companies will remain high.
In India in January-may 2013 was produced 33.3 million tons of steel, 3.0% more than in the same period a year earlier. National metallurgists reduced the rate of growth due to the economic problems in the country, the shortage of iron ore and electricity. However, as stated by the Minister of metallurgical industry of India, Beni Prasad Verna, at the end of 2012 total production capacity in the industry exceeded 90 million tons per year, and in the next two years is expected to be completed number of major projects. In particular, the country's largest state steel company SAIL, which now produces about 14 million tons of steel a year, plans by the spring of 2014 to increase its capacity to 19 million tonnes per year, and by the end of next year to 24 million tons per year. Thus, steel production in the country will continue to increase.
Some growth was achieved this year, the Japanese steelmakers, which was helped by the devaluation of the yen against the dollar contributed to the competitiveness of Japanese products on the world market. However, since the end of may, the yen has risen in price on 8%, so that in the foreseeable future, the impact of this factor will decrease significantly.
In Korea, the steel production in the first five months of 2013 declined by 5.1% compared to the same period a year ago. This was partly due to adverse trends in the economy, however, a considerable role was played by the shutdown for repair of blast furnaces in the mills of the companies Posco and Hyundai Steel. By the way, in early June, Posco completed the project on modernization of blast furnace No. 1 at its head office in Kwanjana. The reconstructed blast furnace was the largest in the world, and its productivity has increased from 3,28 million to 5.65 million tons of pig iron per year. So, apparently, in the second half of the Korean metallurgists again will increase the growth rate.
At the same time, in Turkey, which in recent years has also rapidly developed its steel industry, like Korea, the decline is likely to be delayed. In the first five months of 2013, steel production in the country decreased by 4.1% compared to the same period a year ago. This is due, firstly, to the fact that some national mini-mills due to the relative high cost of scrap metal have switched to using purchased semi-finished products, and, second, the worsening of Turkish companies in foreign markets.
In Western countries, the demand for steel products decreased due to the economic downturn. In this regard, steel production in the U.S. fell by 7.1% in comparison with January-may last year, and in the European Union by 5.7%. Moreover, if the U.S. market in may there was some recovery, the EU observers still talk about overproduction and oversupply. However, European companies are very difficult to make a decision about the closure of facilities, as opposed by both the local government and the trade unions. In recent months, the reduction in steel production occurred mainly in Eastern Europe. Prosperous in this region still looks only Slovakia, where the authorities have provided the benefits of US Steel company that closed and sold the largest local steel plant to US Steel Kosice.
Not the best situation in the recent case in the Russian market. In the first five months of this year, steel production in Russia decreased by 3.2% compared with the same period a year ago. More dependent on exports to Ukraine, the decline was less significant – only 2.4%.
In June, global steel production will obviously be reduced compared to may. But, apparently, insufficient to stabilize the supply and demand in the world market.
 
Victor Tarnavsky
Rusmet.ru