Commodities | May 10 2006
By Chris Shaw (Tokyo)
Steel industry consultant MEPS has released its latest estimates for global crude steel production for 2006, forecasting a rise of 4.1% to 1,176m tonnes. According to MEPS, the size of the increase is a reflection of the efforts of producers to limit output to sustain prices rather than face a price crash similar to the one experienced in 2005.
These actions to limit the growth in production have had a positive impact, as the consultant notes both demand and prices have improved in some markets as a result.
MEPS expects Asia will be responsible for much of the production increase, with China set to record higher output despite a slowing of its production growth rate. In total, it forecasts Asian production will increase by as much as 40m tonnes this year, with India also likely to be a major contributor to the higher level of production.
At the same time, it suggests steel production rates among EU producers are growing faster than had been expected, so production from the region should be as much as 2m tonnes higher this year.
Growth in Eastern European production is also likely as producers in the region improve operating performance and enjoy a reduction in maintenance related stoppages. In contrast, MEPS suggests producers in Australia and surrounding countries will see production limited by blastfurnace relines, at the same time as higher imports impact on the market.
Better performance from integrated producers should see North American production increase by as much as 2.5m tonnes, though MEPS estimates total South American production is likely to be flat this year.