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Market Oracle FREE Newsletter


Steel Volume Set to Grow in 2011

Commodities / Metals & Mining Jan 05, 2011 - 05:54 AM GMT

By: Anthony_David


World Steel Association (worldsteel) data states that the total crude steel produced by its 66 member countries during November 2010 was 114 million tonnes, which is 5.1% higher YoY. The first 11 months of the year saw a total crude steel production of 1.28 billion metric tonnes, a growth of 16.2% YoY. In Asia, China’s YoY crude steel production in November rose by 4.8% to reach 50.2 million tonnes, while India’s production rose by 3.15% YoY to reach 5.56 million tonnes. November production in the US went up by 13% YoY to reach 6.5 million tonnes while that of Brazil fell by 2.8% YoY to reach 2.6 million tonnes.

China’s steel market is strangely stable with no significant change in recent times despite several contradictory situations. Winter demand is on the decline while production cost is still high. Inventory levels are at comfortable levels and are not causing any undue pressure on the market. Meanwhile, leading steel producers are continuing to raise prices leading to steel traders having to shell out higher amounts, which in turn is causing steel product prices to remain at a high. On the other hand, the lower demand leaves no room for further price hikes.

Easy access to raw materials, low cost manpower and the expectations of a high growth rate in India’s steel industry over the next decade has been attracting many global steel and steel allied companies to invest in the Indian steel sector. Analysts opine that with an expected annual growth rate of 8–10%, few global companies can afford to ignore the Indian market. During the year, ArcelorMittal Netherlands BV bought a 35% stake in Uttam Galva Steels Limited, UK-based Stemcor Holdings Limited bought a 10% stake in Ispat Industries Limited, and Japan-based JFE Steel Corporation bought a 14.99% stake in India’s third largest steel maker by volume, JSW Steel Limited. More recently, South Korea-based GS Global Corporation has agreed to buy a stake worth $5 million in Steel Strips Wheels Limited, which recently sold a 5.9% stake to Japan-based Sumitomo Metal Industries Limited.

South Korea’s Posco plans to set up a new steel plant in India in partnership with the state run Steel Authority of India Limited (SAIL). ArcelorMittal also announced three projects in India, one each in Jharkhand, Karnataka and Orissa. Iron ore producer NMDC Limited has joined hands with Russia’s OAO Severstal to build a steel plant in Karnataka. Although most of the announced projects are in various stages of securing regulatory approval, the number and size of the investors display the keen interest of major global players to be a part of the growth story. India’s steel demand is being largely driven by the automobile and appliances sectors.

In a development that perhaps signals a stronger recovery of the US and Canadian metals industry, the Metals Activity Report from the Metals Service Center Institute detects a robust rise in the YoY service center shipments of steel products from the US (+28.4%) and Canada (+19.5%). Further, mid-December statistics show that the domestic steel production in the US during 2010 rose by 38.8% YoY, from 61.525 million tonnes last year to 85.334 tonnes this year. Capacity utilization in 2010 has been around 70.2% against 51.5% a year ago.

By Anthony David

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is to serve as a monthly compass for those who take a fundamental view of investment regarding the Molybdenum, Manganese and Magnesium metals markets, are concerned with the emerging critical under-supply of these strategic metals to Western nations and wish to profitability chart their course. Each month we will research and provide, in as short and concise a manner as possible, the most applicable information available on resources that will have the biggest impact on our day to day lives. Click here to sign-up for our FREE monthly report

© 2011 Copyright  Anthony David- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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