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NORTH American and European steelmakers, many of them operating below 50% capacity, still await a boost from economic stimulus packages even as signs emerge that orders and prices are slowly picking up. There is a global divide between the industrialized and developing economies, as overall world steel production has fallen over 20% since last September's economic downturn but is surging in China and India.
The heads of major steel producers ArcelorMittal and US Steel Corp told a steel conference in New York this week that they are on the verge of restarting idled capacity as demand begins to pick up a little. But the still critical state of the industry was evident on Thursday when Europe's second largest producer Corus, part of India's Tata Steel, said it was planning to cut almost 2,000 more jobs, six months after axing 2,500.
Global steel production has fallen over the last year as growth in demand dried up following a boom period of China-fueled growth. However, worldwide production edged up slightly in May from April largely due to output from China and India, although elsewhere it was down 21% on a yearly basis, according to the World Steel Association. Chris Plummer, managing director of Metal Strategies in Philadelphia, said China was on track to produce 540 million tonnes of steel this year — way above its previous estimate of 465 million tonnes.
"And it does not look like slowing down," he told a McCloskey Group coal conference on the outlook for coking coal, which is used in steel production. "India is certainly one of the stronger countries in 2009 and going forward," he added, noting Indian steel production is growing at 12% annually.
"China and India are the only bright spots for anyone wanting to sell coking coal," said Ernie Thrasher, president of Xcoal Energy and Resources, a private coal exporting company.
"We expect the steel industry to have a much healthier second half," he told the coal conference.
At the Steel Survival Strategies conference organized by American Metal Market, talk was about whether, and how quickly, stimulus packages can get the industry back on its feet. The Obama administration has included $200 billion worth of public works projects in its $787 billion economic recovery measure. Steel companies and smaller manufacturers lobbied for a "Buy American" measure, which requires stimulus projects to use iron, steel and other goods made in the United States. "The solution for us is to reinvest in this country, to rebuild our infrastructure, to put people to work, and yea, it will be a lot of steel," said Dan DiMicco, chief executive of steelmaker Nucor Inc.
"We're realistic that it's going to be one tough son-of-a-..." he said. "Setbacks along the way will be unavoidable, but we haven't seen them yet."
But DiMicco was skeptical of early signs the economy is turning. "Green shoots? — Well, you don't know at this time if those green shoots are poison ivy or corn."
Keith Busse, president and chief executive of Steel Dynamics Inc, said for hard infrastructure the United States probably needs to spend about $2 trillion "and $500 billion would be a good start.
"And all that was allocated was about $90 billion and a lot of that went into projects that won't move the needle much."
The heads of major steel producers ArcelorMittal and US Steel Corp told a steel conference in New York this week that they are on the verge of restarting idled capacity as demand begins to pick up a little. But the still critical state of the industry was evident on Thursday when Europe's second largest producer Corus, part of India's Tata Steel, said it was planning to cut almost 2,000 more jobs, six months after axing 2,500.
Global steel production has fallen over the last year as growth in demand dried up following a boom period of China-fueled growth. However, worldwide production edged up slightly in May from April largely due to output from China and India, although elsewhere it was down 21% on a yearly basis, according to the World Steel Association. Chris Plummer, managing director of Metal Strategies in Philadelphia, said China was on track to produce 540 million tonnes of steel this year — way above its previous estimate of 465 million tonnes.
"And it does not look like slowing down," he told a McCloskey Group coal conference on the outlook for coking coal, which is used in steel production. "India is certainly one of the stronger countries in 2009 and going forward," he added, noting Indian steel production is growing at 12% annually.
"China and India are the only bright spots for anyone wanting to sell coking coal," said Ernie Thrasher, president of Xcoal Energy and Resources, a private coal exporting company.
"We expect the steel industry to have a much healthier second half," he told the coal conference.
At the Steel Survival Strategies conference organized by American Metal Market, talk was about whether, and how quickly, stimulus packages can get the industry back on its feet. The Obama administration has included $200 billion worth of public works projects in its $787 billion economic recovery measure. Steel companies and smaller manufacturers lobbied for a "Buy American" measure, which requires stimulus projects to use iron, steel and other goods made in the United States. "The solution for us is to reinvest in this country, to rebuild our infrastructure, to put people to work, and yea, it will be a lot of steel," said Dan DiMicco, chief executive of steelmaker Nucor Inc.
"We're realistic that it's going to be one tough son-of-a-..." he said. "Setbacks along the way will be unavoidable, but we haven't seen them yet."
But DiMicco was skeptical of early signs the economy is turning. "Green shoots? — Well, you don't know at this time if those green shoots are poison ivy or corn."
Keith Busse, president and chief executive of Steel Dynamics Inc, said for hard infrastructure the United States probably needs to spend about $2 trillion "and $500 billion would be a good start.
"And all that was allocated was about $90 billion and a lot of that went into projects that won't move the needle much."
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