World crude steel production registered a marginal increase of two per cent at 130 million tonnes (mt) in July with a sharp drop in output reported in the Euro Zone, according to World Steel Association data released on Wednesday.
Steel production in India rose six per cent to seven mt in July. In the last seven months, the country’s crude steel output was up three per cent at 43 mt. China’s crude steel production was up four per cent at 62 mt.
The capacity utilisation of steel producers in 62 countries reporting output to WSA declined to 79 per cent in July from 80 per cent logged in June.
Goutam Chakraborty, Research Analyst, Emkay Global Financial Services, said the increase in Chinese production was a big surprise as the industry was expecting a sharp drop due to their economic slowdown and maintenance work undertaken usually during these months.
In India, he said, steel prices especially that of long products are under pressure in the last four months due to lower demand and sharp fall in scrap prices. Weak rupee has restricted any significant dip in prices. The fall in supply due to the ongoing strike in Punjab to protest against power tariff hike has helped steel prices stabilise.
In contrast to the global markets, iron ore prices in India are still higher due to supply constraints on account of the iron ore mining ban in Karnataka. NMDC recently hiked prices by 8-13 per cent to Rs 6,100 a tonne for lumps and Rs 3,000 a tonne for fines for the September quarter.
The profit margin of steel companies in India may continue to remain under pressure with the drop in demand and rise in input cost, said Chakraborty.
In the European Union, Germany production was down 2 per cent to 4 mt. Spain’s was up 7 per cent and UK’s rose 7 per cent to 1 mt. Brazil’s production was down four per cent 3 mt. US production was up one per cent 7 mt and Russia’s was jumped four per cent to 5.9 mt, said WSA.
Globally, steel prices stabilised during the last fortnight on expectations of a cut in Chinese steel production. Black Sea (free on board) HRC (hot rolled coil) export prices hover at $557 a tonne, while it is $670 a tonne in North American and €506 a tonne in North European.