According to the data released by the World Steel Association (WSA), global steel output increased to 107 million tons in the month of Sep 2009, down marginally (0.6%) from the same month of the previous year. Month-on-month, steel output improved slightly from 106.5 million tons. World crude steel production has continued to show a steady increase since Apr 2009. 

Steel production had reached its highest level in July this year on the back of a moderate rise in demand and the resumption of idled facilities by producers. Total output of 103.9 million tons was an improvement of 4% from 99.8 million tons produced in the last month, but down 11.1% year over year. 

All major steel producing countries such as China, Japan, Germany, the U.S., Brazil, Turkey, Russia and Ukraine showed peak monthly figures so far this year. Production in the Middle East, where demand was buoyant last year due to booming infrastructure spending, edged up 2% in September. Monthly steel output in Asia increased 15% to over 60 million tons in September. Of this, production in China − the world’s biggest producer and consumer of steel − climbed 28.7% to 39.4 million tons. However, global steel production was down 32.3% in North America in the month of September while production in Europe saw a drop of 23.7%. 

Key steel consuming industries such as auto, shipbuilding and construction have been experiencing weak demand in the last quarters, forcing global steel makers to lower production levels. U.S. Steel Corp. (X) had slashed production by almost 62% during the second quarter of 2009, while Korean steel maker POSCO (PKX) was forced to reduce production for the first time in its history. POSCO curtailed production by about 15% during the period. 

However, with steel demand picking up in the last couple of months, United States Steel Corp. is restarting its blast furnace at its Hamilton, Ontario, plant after a nine-month shutdown. U.S. Steel had closed the Hamilton blast furnace in Nov 2008. It suspended the remaining operations at Hamilton and the Nanticoke facilities in March 2009 due to a drop in demand. Both the facilities were running at less than half their capacity. 

We expect global steel demand to improve in the rest of 2009 with a strong surge from the user industries. China is expected to continue to remain the largest consumer of steel going forward. The World Steel Association is forecasting a 8.6% year over year decline in steel production, better than the previous forecast of a 14.1% decline driven by a strong uptick in Chinese steel demand. With signs of a recovery across the world from the second half of 2009, the association is anticipating global steel demand in 2010 to grow by 9.2% to 1,206 million tons, which is a restoration to the level of 2008.
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