Global steel output rises 3% in Jan-Sept' 2013

KOLKATA: Global steel production rose 3% to 1186.2 million tonnes in the nine months to September from a year ago, despite concerns of overcapacity in the sector.

China, which accounts for nearly half of the global steel output, saw production increase by 8.6%, while India and Japan clocked 3% and 1.4 % growth, respectively, industry data showed.

The US, Russia and South Korea, however, bucked the up-trend, with production dropping in these countries by 4%, 3.1% and 6.6%, respectively.
According to steel sector reports, oversupply and China’s rising exports are factors that are likely to keep a check on global steel prices in the short term (3-6 months).

“In India, capacity in the steel sector witnessed a 10% annual compound rate of growth in the last three years, but utilisation levels have been on a declining trend,” Angel Broking said in its latest report on the domestic steel sector. “Inventory levels in the domestic market also remain high amid weak demand growth as consumption between April and August 2013 was seen flat at 24 million tonne.”

On short-term price trend, Reena Rohit, chief manager (non-agri commodities and currency) at Angel Broking, said, “We expect the NCDEX Steel Long Futures Contract to find support at Rs 29,900-31,350 per tonne and face resistance around Rs 33,670-34,600 per tonne.”

Reports say that China is set for record steel output this year despite an overcapacity in its steel industry. Steel exports from the country too are witnessing a sharp increase, which analysts say could rein in global steel prices. In the first-half of the current year, global steel prices corrected by about 6%, mainly on the back of rising Chinese exports.

While signs of a rebound in the Chinese economy should help firm up steel prices in the short-term, experts feel that the effect is likely to be muted as the world’s largest steel producer is witnessing increased production levels despite overcapacity.