The steel industry is showing tentative signs of recovery, based on data just released for the third quarter of 2009, writes Kevin Fowkes, manager of the steel research business at Integer.
“The story of 2009 so far has been the sustained growth of steel consumption and production in China”, says Fowkes. “Outside of China, steel demand and production fell by an average of 30% following the global financial crisis, and for the first half of 2009 there was little or no improvement in this situation.”
Latest production data, just released by the World Steel Association, shows that steel output outside China finally began to recover during the third quarter of this year. “Although it still remains over 15% below where it was before the collapse of Lehman Brothers”, says Fowkes, “steel production outside China has now recovered half of the way back to where it was”.
Chart: Global steel output since September 2008 (indexed, Sep 2008=100)
Steel prices, meanwhile, have also begun to recover in recent months, although they still remain in general around 40% below where they were in September 2008.
Chart: Steel prices since September 2008 (indexed, Sep 2008=100)
The modest improvement in market conditions is clearly visible in ArcelorMittal’s Q3 financial result, with the company reporting a net profit after three consecutive quarters of losses. The company reported an operating profit (EBIT) of $305m for Q3, and a net profit of $903m. “It seems that the major steel companies are finally inching back to profitability, after a year of severe losses” says Kevin Fowkes.
Chart: ArcelorMittal operating profit (EBIT) – millionUS$