In a sure sign of demand recovery, world crude steel production for 66 countries reporting to the World Steel Association (WSA) was 108 million tonnes in February, an increase of 24 per cent from the same month last year.
The capacity utilisation figures of WSA, representing 180 steel producers including 19 of the world’s 20 largest steel companies, boosts the optimism further. The world crude steel capacity utilisation ratio for the 66 countries in February 2010 was 79.8 per cent, a 15-month high since September 2008. Compared to February 2009, the utilisation ratio in February 2010 increased by 12 percentage points. That includes the big-ticket acquisitions made by Indian steelmakers prior to the slowdown.
Steel producers — Tata Steel, Essar Steel and JSW Steel — have ramped up capacity utilisation at mills in North America and Europe.
J Mehra, director Essar Steel, said the capacity utilisation at Algoma (Canada) was 80 per cent. Essar Steel acquired Algoma in 2007. However, owing to the downturn, the production of Algoma had to be adjusted to meet production requirement.
Corus, acquired by Tata Steel around the same time, was operating at 80 per cent capacity, said a company spokesperson. Recently, the Tata Steel management had indicated that before the end of the financial year, capacity utilisation would be 100 per cent.
However, JSW Steel, which completed the takeover of its US mills in 2007-08, had improved capacity utilisation at a relatively low scale. Last year, during the downturn, the mills were operating at 15-20 per cent.
Jayant Acharya, director (sales and marketing), JSW Steel, said it was below 30 per cent and the cost of producing slabs had increased on the back of raw material cost while finished product prices had not increased to that level.
In the US, production in February 2010 was six million tonnes, an increase of 51.3 per cent compared to February 2009.
Though the global economy had overcome the downturn blues, it was still uncertain as to when the production would be normalised.
Mehra said the growth in the first quarter in the US was positive, but it would be difficult to forecast when Algoma would have 100 per cent capacity utilisation. “We have to see how it goes,” he said.
