Falls to 73.4 per cent in November from that in the same month last year, shows a World Steel Association report.
The world steel capacity utilisation ratio for November has fallen to 73.4 per cent, its lowest point in two years.
According to the World Steel Association, the capacity utilisation ratio of the 64 countries reporting to it, fell to 73.4 per cent, a drop of 2.6 per cent when compared to the same month last year. This is also the lowest capacity utilisation in two years. Sequentially, when compared to October, the number has fallen 2.8 per cent. The earlier lowest utilisation ratio in the last two years was in December 2010, at 73. 6 per cent.
The fall hasn’t been sudden though. In February this year, the ratio had hit a yearly peak of 83.3 per cent. It has been downhill since with a couple of upward spurts. In June, it was 82.8 per cent, dropping to 77.3 per cent in August.
Capacity utilisation ratio means, indexed to 100, how much steel is being produced. For example, 73.4 per cent utilisation, means that in November, 73.4 tonnes of steel was produced as against the installed capacity of 100 tonnes.
An analyst with an international research firm said the European financial crisis was affecting the confidence of buyers and, thus, affecting the steel demand. He said, “The demand for steel is failing to improve, coupled with the lean holiday season.”
December is a holiday month and steel sales are usually weak during this period. Another analyst said the demand is expected to pick up in January.
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Though utilisation levels are falling, total steel production in November rose 1.1 per cent, to 116 million tonnes as against the same month last year.
China, which produces 45 per cent of the world's steel, registered a slight drop of 0.2 per cent, at 49.9 million tonnes. Production in Japan in November dropped 3.2 per cent, year-on-year. In the European Union, Germany reported a sharp decline of 10 per cent in production in November as against the same period last year. Italy and France reported a jump of 12.3 per cent and 4.2 per cent y-o-y, respectively.
India did not furnish the data to WSA till the time the report was published. Hence, the association has factored-in the expected production in India.
WSA said India is expected to produce six million tonnes of steel in November as against 5.5 million tonnes in November, 2010, a growth of 8.9 per cent.
Despite India’s meagre 2.9 per cent steel demand growth in March-October, the country this year has been one of the best performers. In India, the production outpaced demand at 8.7 per cent. Alok Kumar Neman of Nomura, in a report dated December 7, said despite just 2.9 per cent year-to-date growth in production, Indian companies have been operating at rated capacities.