Steel News

Steel Statistics in the News

Contents:-
Global Steel Production  :  Consolidation  :  China Watch  :  EU Watch  :  US Watch  :
CIS Watch  :  Global Scrap Trade  :  Global Iron Ore Trade


Global Steel Production  

Crude Steel Production rose 7.3% in 2007 to 1,343 million tonnes.  Chinese production up 16% to 36% of world total.  January-May 2008 sees global output rise 5.6% driven by Chinese growth of 9.4%.  Global production excluding China up 3.4%.

Global crude steel production for the 62 countries reporting to the IISI broke the 100 million tonnes per month level for the first time in March 2006 on the way to recording a total for 2006 of 1,240 million tonnes up 9% on 2005.  2007 saw monthly production top 114 million tonnes on the way to a total of 1,343 million tonnes, up 7.3% on 2006.

 

The 2007 total represents a 5 year increase of 49%, a rise since 2000 of 59% and an increase since 1998 of an astonishing 73%. 

January-May 2008 has seen global output rise 5.6% compared to the same period last year.  Growth in 2008 has again been led by China, recording production up 9.4% on the first five months of 2007 at 216 million tonnes and 37% of the world total.  In March and April China came within a whisker of exceeding monthly production of 45 million tonnes.  Germany produced 48 million tonnes in all of 2007 and Ukraine 43 million tonnes!

Excluding China, world production growth over January-May 2008 was a more modest 3.4%.  Other regions saw strong growth.  NAFTA output was up 5.9% to 58 million tonnes, with US production at its highest levels since spring 2006.  South American production, up 4.2% was driven by Brazilian growth of 6.8%.  African production was marginally up despite falls in the major producing nation, South Africa.

In the Middle East production was up 9.7%, again despite the major player, Iran, showing falls.  Non EU European growth, driven by Turkey, was 8.8%.  The CIS saw production growth of 3.1%, despite some sluggishness in Kazakhstan.  The Asian majors other than China also performed strongly averaging 5% growth.  Production in Australia was up 1.7%.

 
 
In the tables below we summarise annual IISI crude steel production data.

Stainless steel production grew 17% to 28.4 million tonnes in 2006,  led by Asian growth of 21% to 15.1 million tonnes or 53% of the global total.  Chinese stainless production grew 68% to 5.3 million tonnes in 2006.  2007 global output fell 2% to 27.8 million tonnes despite 6% Asian growth to 16 million tonnes and 58% of the total.  The first half of 2007 saw production up on the 2006 levels before output was cut in quarter 3 with a partial recovery coming in quarter 4.


Consolidation

China : Tangshan and Handan Steel Groups announce merger.
With combined 2007 crude steel production of 31 million tonnes the new group moves ahead of Baosteel to become the larges Chinese mill and fifth largest in the world.

The US$ 38.3 billion Arcelor-Mittal merger formed a global giant accounting for approximately 118 million tonnes or 9.5% of world production in 2006.  Mittal paid about 4.5 times the ebitda of Arcelor in 2006.  More significantly it made them the largest producer in all major markets except Asia. 

The second largest steel industry merger to date saw the creation of then fifth biggest steel producer.  Tata Steel acquired Corus for £6.2 billion (US$ 12 billion), paying 9 times Corus ebitda.  Tata paid 33% more than their opening offer in order to outbid CSN leading to concerns that they overpaid for the Anglo-Dutch steelmaker.

Other Indian steel companies are looking to expand internationally as seen by the April 2007 acquisition of Algoma Steel by Essar.  Essar (2.8 million tonnes per year) have agreed to pay US$ 1.6 billion for Algoma of Canada (2.3 million tonnes per year).

There has been further activity in Canada with Sweden's SSAB buying 3.4 million tonnes per year Ipsco for US$ 7.7 billion, to create a 7 million tonnes per year producer.  Early 2008 sees the disposal of Ipsco tube mills by SSAB to Evraz for US$ 4 billion with Evraz on-selling part of the purchased company to Russian tube-maker TMK for US$ 1.2 billion.  Stelco, a 3.7 million tonnes per year producer became US Steel Canada in a US$ 1.9 billion deal completed in October 2007, leaving Canada without a significant domestically owned producer.  The merged group has around 25 million tonnes annual capacity, slightly ahead of the combined Tata-Corus total.

In the US, Russia's Severstal has recently finalised the purchase of Sparrows Point from Arcelor-Mittal and WCI Steel and is close to agreement on the purchase of Esmark, which includes Wheeling-Pittsburgh Steel.  India's Essar  had been well placed to secure Esmark to add to their North America holdings of Algoma Steel of Canada and Minnesota Steel of the US, but Severstal has critical steelworkers support.  

Speculation regarding a hostile takeover of Posco continues.  Posco is the 4th largest steel company in the world after Arcelor-Mittal, Nippon Steel and JFE Steel.  Their vulnerability stems from the fact that the ownership of their shares is very fragmented.  Posco have been taking steps to protect themselves including requesting "friendly" shareholders to increase their holdings. 

Shareholdings in the large South American groups are dominated by family holdings.  In the US there are already problems with the strong anti-trust legislation.  In Europe there are similar anti-trust difficulties, while,  additionally Thyssen-Krupp has secured a 25.1% blocking minority in their own shares through Krupp foundation.  As Arcelor-Mittal know from their frustrated attempts to buy into Laiwu Iron and Steel and Baotou Iron and Steel, buying into China is extremely complex.  With their ownership structures and ambitions Russian mills are not particularly realistic targets and buying in India would also run into red tape and shareholding structure problems.  In Japan Nippon, Sumitomo and Kobe all hold shares in each other and have an agreement to act together should any of them face unwanted advances.

Despite recent activity the steel industry remains much more fragmented than its suppliers (particularly iron ore), its largest customers (such as automotive) and its rivals (for example Aluminium).  Further take-overs, mergers and alliances are inevitable as producers look to integrate horizontally with other mills and vertically with raw material suppliers and steel distributors to secure their futures.

Duferco sold 50% of their US and European mill operations to NLMK in 2006, with NLMK holding the option to take a majority.
Speculation has linked Russia's MMK and US Steel with a move for AK Steel following the settlement of a lawsuit by AK regarding healthcare costs, although share activity at present seems to be based upon speculation that an approach will be forthcoming. 
Gerdau-Ameristeel has completed its US$ 4.2 billion purchase of Chaparral Steel.
In the US scrap sector Omnisource has been sold to Steel Dynamics for US$ 1 billion and MMI are set for a US$ 1.6 billion merger with the Australian Sims Group. 
Russia's Metalloinvest and the Ukraine's Industrial Union of Donbass have been carrying out due diligence work in preparation for their proposed merger.  Such a merger would create a group with crude steel capacity of 15 million tpy now and possibly 20 million tpy by 2008.
Also in the Ukraine, the assets of SCM and Smart holdings are to be merged by the close of 2007 and Illyich is in talks to form partnerships with other Ukrainian companies.
Evraz became a 17 million tpy group with the purchase of Oregon Steel in the US in 2006 and now holds a majority stake in South Africa's 1 million tpy Highveld Steel.
The start of 2008 saw the purchase US plate maker Claymont Steel for US$ 565 million and Canada's Ipsco's pipe mills for US$ 4 billion from new owners, Sweden's SSAB. 
NLMK has also completed the purchase of fellow Russian steelmaker Maxi-Group.
MMK have also made an offer to buy a majority of Iranian 2.5 million tonnes per year producer Esfashan Steel, having just taken their stake in Russian coal miner Belon to 42%.  Belon plans to increase output of coal by 50% in 2008.
In China, Baosteel has taken a 70% stake in Bayi Iron and Steel, combined 2006 production was 26 million tonnes.  Baosteel are also rumoured to be interested in 15 million tonnes Shagang Steel, whom are themselves likely to acquire Yongxing Steel.
The merger of Laiwu Steel and Jinan Steel was scheduled for spring 2007, to form Shandong Steel, but has met with delays.  Their combined 2006 production was 22 million tonnes.
Although Benxi and Anshan were joined under the umbrella of Anben in August 2005, recent board changes at both companies now make timely moves to integrate operations much more likely.  Anben produced 23 million tonnes in 2006.
The combined Wuhan and Liuzhou group (Wuhan acquired a majority in Liuzhou in January 2005) produced 19 million tonnes in 2006, that merger has also run into difficulties with Liuzhou recently announcing that it remained independent.  Wuhan however has agreed to take a 48% stake in 5 million tonnes Kunming Steel.
Shougang Steel purchased 34% of Shiucheng Steel in 2005, their combined 2006 production was 13 million tonnes.  To date however much of this activity has been stakeholding rather than merger as the component companies have continued to operate independently. 

The top 10 mills Chinese mills accounted for 33% of production in 2006.  However 2007 should show greater concentration within the Chinese steel industry as associated mills begin to rationalise their activities.
CISA said in March 2008 that they are confident that the top 10 will account for 50% of production by 2010 as per the 2005 Steel Industry Development Policy and it reported that several mergers under way, including those of Laiwu Steel and Junan Steel, of Wuhan Steel and Liuzhou Steel and of Benxi Steel and Anshan Steel are making new progress.

In Australia the proposed Onesteel - Smorgon Steel have merged.  Posco have been rumoured to be interested in Bluescope, but they deny this.  

BHPB-Rio Tinto : See Iron Ore


China Watch

Chinese 2006 crude steel production was 423 million tonnes, more than in 2003 and 2004 combined and 19% up on 2005.  2007 production was 489 million tonnes up a further 16%, accounting for 37% of global output.  Five month 2008 production is up 9.4% to 216 million tonnes and setting a new record in May of 46 million tonnes - Germany produced less than 49 million tonnes in all of 2007 and China produced "only" 46 million tonnes in a year as recently as 1985. 

With such production growth outstipping domestic demand growth, China has gone from a massive deficit to a huge surplus in the trade of steel mill products.



In 2007 exports were up 33% to 65 million tonnes despite tailing off dramatically after April as export tax and rebate changes came into effect.  Imports fell 9% to 17 million tonnes, leaving China with a 2007 trade surplus in steel of 48 million tonnes (US$ 22.3 billion). 

This takes the swing in the Chinese balance of trade since 2003, when it had its record deficit, to 84 million tonnes (US$ 40.9 billion). 

Such growth in production and exports led to increasing international pressure on the Chinese government to slow expansion and curb exports.  The latter half of 2006 saw a number of changes to export rebates and taxes which failed to impact.  However April-July 2007 saw the introduction of far larger changes to the export regime, with both export VAT rebate cuts and export tax increases, which greatly reduced Chinese export levels.

Chinese exports have fallen seven months in a row from the 7.6 million tonnes record in April 2007 to 3.9 million tonnes in November.  December saw a slight upturn to 4.6 million tonnes, ahead of further export tax increases applicable from January 2008.   

The January 2008 export tax increases took Semis to 25% (from 15%), certain long products to 15% (from 10%), most welded pipe to 15% (from nothing), most narrow strip to 15% (from 5%).  200 series stainless also went up to 10% from 5%.

January and February 2008 saw Chinese exports fall further to 3.9 and 2.9 million tonnes respectively, before March and April saw them edge up to 3.8 and 4.4 million tonnes.  May 2008 saw a much larger increase to 5.2 million tonnes, the highest since August 2007.

Despite recent rises the January to May 2008 export total for steel mill products at 20.1 million tonnes remains 32% below that for the same 2007 period.  In line with the airms behind the changes in China's export regime semis' exports were down 97%, long product exports fell 41% and those of long products and tubes 10% and 9% respectively.



In addition to increasing export taxes the Chinese government has also extended the range of products that no longer enjoy the tax free import of steel making raw materials when produced for export.  China is also in the process of developing an export qualification system with a suggestion that only concerns which have exported over 10,000 tonnes per year would qualify. 


EU Watch

In 2005 the EU25 registered a trade surplus in steel mill products of 4.2 million tonnes (€11.4 billion).  Exports were 30.9 million tonnes and imports of 26.8 million tonnes.

2006 saw a dramatic 12.9 million tonnes shift into deficit.  Exports fell 2% by quantity while increasing 12% in value to 30.3 million tonnes (€29.4 billion).  Imports soared 46% by quantity and value to 39.0 million tonnes (€21.5 billion).  The resultant trade balances are -8.7 million tonnes (+€7.9 billion).

External EU27 trade saw imports jump 23% in 2007 to 48.5 million tonnes whilst exports remained steady at 32.2 million tonnes.  A quantity deficit of 7.3 million tonnes in 2006 rose to 16.3 million tonnes in 2007, whilst a value surplus of €8.3 billion in 2006 was cut to €2.5 billion in 2007.  Despite the strength of the Euro exports rose and imports tapered off towards the end of the year, with Quarter 4 showing an external trade deficit of only 0.8 million tonnes.

Imports in Quarter 1 2008 at 9.7 million tonnes were slightly up on Quarter 4 2007 but 23% down on Quarter 1 2007.  Quarter 1 2008 exports at 8.5 million tonnes were also slightly down on the level of Quarter 4 2007 but were up 12% on the level of Quarter 1 2007.  The Quarter 1 2008 EU27 trade deficit was 1.2 million tonnes compared to 5.09 million tonnes in Quarter 1 2007.  Despite running at a deficit the EU27 returned a value surplus for the Quarter of €2.2 billion, close to matching the total for 2007.  These increases in exports falls in imports have taken place despite a 12% strengthening of the Euro against the US Dollar.



The 2007 surge in imports, particularly from China, saw Eurofer act and Anti-Dumping actions on Cold Rolled Stainess (China, South Korea, Taiwan), Hot Dipped Metallic Coated Coil (China) and certain Wire Rod (China, Turkey) have already been filed with the European Commission.  Further actions on certain heavy Hot Rolled Plate and Welded Pipes (China, Russia, Belarus and Bosnia-Herzegovina) are being considered. 

However, along with the general downturn in Chinese exports, Chinese exports to the EU27 are also on the way down.  Chinese quarterly exports to the EU27 were Quarter 1 - 1.9 million tonnes, Quarter 2 - 3.9 million tonnes, Quarter 3 - 3.0 million tonnes, Quarter 4 - 1.7 million tonnes, Quarter 1 2008 - 0.9 million tonnes.  Chinese exports to the EU27 of products subject to (pending) anti-dumping action have been slashed. 

 

   

EU27 crude steel production rose 1.7% in 2007 to 210 million tonnes.  The EU share of total global production slipped from 16.5% to 15.7%, as global production rose 7.5%.  However the global figures are slewed by those of China.  With China excluded global production rose 3.3% with the EU27 maintaining production share.  However the EU increases in production were realised over Quarters 1 and 2 with Quarters 3 and 4 seeing output below the corresponding 2006 periods.  January-May 2008 saw EU27 production unchanged on the levels of 2007. 


US Watch

US mills produced 98.5 million tonnes in 2006, up 6% on 2005.  Production fell each month after a peak in May that year and 2007 was down 1.4% on 2006 at 97.2 million tonnes.  January-May 2008 saw production of 42.4 million tonnes, up 5.4% on 2007 and at the highest levels since spring 2006. 
July and August 2006 saw imports peaking at more than 3.8 million tonnes per month, however since then import levels have eased off.  The US trade deficit in steel for 2006 was 31.4 million tonnes (US$ 19.7 billion).  In 2007 exports rose 14% to 9 million tonnes, while imports fell 27% to 40.4 million tonnes .  The resultant 2007 deficit was 19.2 million tonnes (-39%) (US$ 15.3 billion (-22%)). 

January-April 2008 saw US imports down 7% to 9.5 million tonnes while exports rose 19% to 3.8 million tonnes resulting in a deficit of 5.7 million tonnes compared to January-April 2007 deficit of 7 million tonnes. 

 

 
 


CIS Watch

CIS steel production continues to power back from the dark days of 1998, when their economies were in dire straits.  The combined CIS produced 74 million tonnes of crude steel then compared to 124 million tonnes in 2007.

Russian 2007 production was up 2% to 72.2 million tonnes, having been up 5% at the half year.  The Russian trade surplus in steel for 2006 was 25.4 million tonnes (US$ 10.2 billion).  This huge surplus was despite an increase in imports of 28% by quantity and 56% by value year-on-year.  2007 saw export levels down 6% and import levels up 27%, reducing Russia's trade surplus by 13% to 22.1 million tonnes (US$ 10.1 billion) as domestic demand has soared.

Russian production over January-May 2008 at 31.6 million tonnes is up 3.8%.  Meanwhile over the first quarter of 2008 exports of 7.7 million tonnes are down 4% whilst imports of 1.2 million tonnes are 17% down on Quarter 1 2007. 

 

The Ukraine registered a 5% increase in production in 2007 to 42.8 million tonnes.  The Ukrainian trade surplus in steel for 2006 was a massive 28.8 million tonnes (US$ 12.3 billion).  The Ukraine's exports equated to a remarkable 74% of crude steel production for this period.  In 2007 exports were down 1% to 29.9 million tonnes, while imports rose 44% to 2.1 million tonnes.  Despite a reduction in the quantity trade surplus of 3%, the value surplus rose 18% to US$ 15 billion.  January-May 2008 saw Ukrainian production of 18.5 million tonnes, 3.5% up on the same 2007 period.  Exports over the January-April period at 10.8 million tonnes were up 6%, whilst imports of 0.9 million tonnes were up 51% on the same period of 2007.  The resultant four month surpluses are 9.9 million tonnes and US$ 6.4 billion. 


Global Scrap Trade

The total amount of scrap shipped internationally was largely unchanged from 2006 - 2007.  Despite more scrap being retained within the EU, Russia and Japan, exports from other sources, particularly the USA rose to compensate. 



 

Our figures for the biggest two importers of scrap are higher than the official figures issued by Turkey (2006 - 11 million tonnes : 2007 - 10.5 million tonnes) and China (2006 - 5.4 million tonnes : 2007 - 3.4 million tonnes) and represent total exports to those countries.

The iron ore price increase for 2008 has added increased demand from BOF producers to strong EAF demand to drive scrap prices to record highs.

 


Global Iron Ore Trade

By far and away the largest exporters of iron ore are Australia and Brazil.

Australian exports in 2006 were up by 4% to 248 million tonnes.  Brazil moved almost level with an export rise of 8% to 243 million tonnes.  Brazil moved fractionally ahead of Australia in 2007 with an 11% increase to 270 million tonnes,  whilst Australian full year exports rose 8% to 269 million tonnes. 

Indian exports have grown fast reaching 90 million tonnes in 2005.  They dropped back by 4% in 2006 to 86 million tonnes.  2007 exports we estimate at 91 million tonnes.

Russian exports increased 34% in 2007 to 32 million tonnes and South African exports rose 16% to 30 million tonnes. 

 

 

EU27 imported 179 million tonnes in 2005, 181 million tonnes in 2006 and 171 million tonnes in 2007, down 6% year-on-year.  Japanese imports of 132 million tonnes in 2005 were 134 million tonnes in 2006 and increased to 139 million tonnes in 2007.

China imported 275 million tonnes in 2005, 326 million tonnes in 2006 and 384 million tonnes in 2007, up 18%.  84% of Chinese imports come from Australia (38% of total and up 15% by quantity on 2006), Brazil (26% up 28%) and India (21% up 6%).

A BHPB-Rio Tinto appears to be moving closer.  This tie up would be bad news for the steel industry, with seaborne iron ore trade then dominated by just two companies.  CVRD, now VALE, of Brazil with 33% and from Australia, 36% : Rio Tinto 22% and BHPB 14%.  Opposition to the move is widespread amongst steelmakers despite BHPB's claims that it would benefit them by accelerating the expansion of mining capacity. 

The existing oligopoly has already led to sharp price rises in recent years on the back of Chinese demand.  Prices have gone up 71% in 2005, 19% in 2006, 9.5% in 2007 and 65%+ in 2008.  Although exports from a number of major sources fell back in Quarter 1, the total shipped remains the second highest on record after Quarter 4 2007. 

 

2006 Country Books now available

We are now publishing the International Steel series for 2006 for 30 countries plus the Summary Tables.  The books give detailed trade tables for the calendar year 2006 plus summary production information.
Click on Publications to order.