July 10, 2008

Global Steel Up, but U.S. Production Dips

By Andrea Holecek, The Times, Munster, Ind.

Jul. 9--Spurred by world demand, total global crude steel production jumped more than 58 percent to 1.34 billion metric tons in 2007, from 848 million metric tons in 2000.

Nancy Gravatt, spokeswoman for the American Iron and Steel Institute, said the primary reason for huge increase in global steel production is demand from emerging nations. In 2007, steel production increased more than 7 percent from a year earlier.

"There's tremendous industrial development in countries such as China, India and Russia, causing a skyrocketing demand for steel that's leading to a huge demand for steel around the world," Gravatt said Monday.

Charles Bradford, president of New York-Bradford Research, agrees, adding Brazil, to Gravatt's list. All four countries have tremendous infrastructure needs, he said.

"They're on a massive infrastructure building campaign, and that takes a lot of steel," Bradford said. "TV and even the Internet have come to some of these places, like China, and people now know what it's like in other places, and they want refrigerators and cars, too. There are 300 million middle-class people in China alone and that creates a lot of demand."

China's crude steel production was 489.2 million metric tons in 2007, climbing 57.2 million metric tons a year earlier. Production in Japan, the world's second-largest steel producing country, was 120.2 million metric tons last year, up from 116.2 million metric tons in 2006.

However, U.S. steel production dropped to 98.2 metric tons in 2007, down from 98.6 metric tons the previous year, according to the International Iron and Steel Institute's "World Steel in Figures." Steel imports also fell 27 percent in 2007 compared to 2006.

The U.S. steel production decline was "fairly modest," AISI's Gravatt said.

"It's a reflection of the overall economy in 2007," she said. "We feel the GDP (Gross Domestic Product) decline is somewhat responsible, The GDP, which is a measure of economic growth, climbed 2.2 percent in 2007, compared to 3.3 percent growth in 2006."

Plus, Gravatt said 2007 was the start of the decline in automotive sales that dipped from 16.2 million units in 2007 from 16.5 million total units in 2006 "And 2007 is when we also started to see significant decline in the housing market," she said.

Luxemburg-based ArcelorMittal remained the world's top steel producer in 2007, with 116.4 million metric tons of crude steel production, according to the IISI's report.

Two major U.S. steelmakers: Pittsburgh-based U.S. Steel Corp. and Nucor Corp., of Charlotte, N.C., also are among the top steelmakers by the amount of crude steel production, however, both fell in the ranking compared to those a year earlier, as steel companies in India and China ramped up production.

U.S. Steel Co., which produced 21.5 million metric tons of steel in 2007, dropped to 10th place from the seventh spot in 2006 earlier, eclipsed by Tata Steel of India and two Chinese steelmakers. Nucor moved to 12th from eighth place, with 20 million tons of crude steel production.

Tata Steel, which jumped to sixth place from 45th in 2006, had 26.5 metric tons of production. Jiangsu Shagang Group, which produced 22.9 metric tons in 2007, moved to eighth place from 17th place a year earlier. Tangshan Iron & Steel Group kept its ninth place ranking with 22.8 metric tons of production.


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