Commodities | Aug 16 2006
By Chris Shaw
If the forecast of steel industry consultant MEPS proves to be correct, global steel production in 2006 will increase by more than 5% for the fifth consecutive year, reaching a total of 1,215 million tonnes.
The total would represent an increase of 7.5% from last year, when 1,129 million tonnes was produced and reflects ongoing strength of demand and a rebuilding of inventory levels following the production cuts of 2005.
Part of the increase is misleading though according to MEPS, as it reflects advance ordering as buyers attempt to order more than they need to beat expected price increases, which are being driven by higher input costs.
As a result, MEPS expects production will again increase in 2007, but at a slower rate than in the past few years as inventory levels are again drawn down.
Asia has contributed most to the rising production in recent years, the region now accounting for about 53.5% of total production, up from closer to 39% at the start of this decade. This year should be no different, with production in the region forecast to increase by 11% from last year to 649 million tonnes. Leading the way is China, which is forecast to increase production by 11.5% to 407.5 million tonnes.
Eastern and Western Europe are also predicted to lift output this year compared to last year’s figures, as is North America.
Declining producers include South Africa and Oceania, while South American output is likely to be flat compared to last year.