World output sets a record because of Chinese overproduction

Staff -- Purchasing, 2/16/2006

World crude steel rose by 5.9% in 2005, to reach a total of 1.129 billion metric tons, a record, according to new tabulations by the International Iron and Steel Institute in Brussels. China accounted for most of the increase as crude steel production in China rose by 69 million metric tons (or 24.6%) to 349.4 million metric tons. China's share of the world total rose from 26.3% in 2004 to 30.9% in 2005. During 2005 it became clear that Chinese production was outstripping demand, and the market was over-supplied. Asia's total output rose by 14.8% to 583.8 million metric tons, more than half of the world total.

A consolidated North American steel industry's output fell by seven million metric tons, or 5.3%, to 127 million metric tons.

Inventory liquidation also affected Brazilian output (down 3.9% at 31.6 million metric tons). Despite growth in Argentina (up 4.8%) and Venezuela (estimated at 8.4%) South America's total output for the year was down 1.2% at 45.3 million metric tons.

The European market was also beset by high inventories. Cutbacks by some producers reduced output in the 25-nation European Union by 3.6%, to 186.5 million metric tons. Production in Russia and the former Soviet bloc (now known as the Commonwealth of Independent States) held steady at 112.9 million metric tons.

Double-digit growth rates in Egypt and Libya took Africa's total output to 17.9%, a 7.1% increase. Rising output in Iran (up 8.3%) and Saudi Arabia (7.3%) provided a similar growth rate for the Middle East.