At least that’s the headline from worldsteel which published world crude steel production data for January today. Of course that’s a rise of 25% comparing January 2010 to January 2009. The press release is here and you can mess about with all the data in the Nerds spreadsheet below.
The more interesting analysis is likely more deeply buried in it. Such as, world crude steel output grew 1.8% December 2009 to January 2010; the developed economies actually grew faster (5.4%) than developing economies (0.5%) month to month. But then they have to. World steel capacity utilization was reported to be 72.9% in January, just a shade above the 68.6% reported by the AISI for the US in the week ending February 20th.
The IMF recently released an updated forecast of global GDP growth for 2010. As many of you know, I’m fond of using the historical relationship between GDP and steel demand to forecast steel demand growth. In fact, last year about this time I provided a forecast of 2009 global steel demand using the latest available GDP forecast from the IMF.
For those of you wondering how well my simple model worked, I’m happy to report that it was close enough for consulting work. The analysis suggested that steel demand would fall by around 8% in 2009. While we don’t have a final demand number yet, we do have a preliminary number for 2009 world steel production from the World Steel Association. Their data suggests production fell 8% last year. Since global production and global demand should be pretty close, excepting inventory changes and interplanetary trade, my forecast of an 8% demand drop was not too bad, all things considered.
So what does 2010 hold in store? The IMF expects global GDP to grow by 3.9% this year, after falling 0.8% in 2009. This updated forecast is more optimistic than the 3.1% global growth the IMF expected when it released its World Economic Outlook in October 2009. Apparently, the IMF is increasingly convinced that the world economy has emerged from the recent crisis. If this forecast ends up being reasonably accurate, global steel demand should grow by 4% this year based on the historical relationship between the two variables. See the graph below.
Of course, this methodology is not perfect. The global GDP forecast provided by the IMF could be wrong. And since our simple model explains only 60% of the annual variation in steel demand growth, there’s additional room for error around the base line forecast. At the risk of tempting fate, I’ll deviate from the model and project that 2010 demand will grow by significantly more than 5% from the extremely depressed level of 2009. If I’m wrong, you know where to find me.
Steel Dynamics announced Q4 and full year 2009 financial results yesterday. The press release can be found here. STLD’s EBITDA per ton for the full year was $54, the best we’ve seen so far among the companies we track in the Nerds of Steel earnings spreadsheet.
The fourth quarter earnings season swung into action last week. Sorry for the delay in getting this post out, but I was in Florida making a presentation at the AMM State of Steel Conference. More on that tomorrow.
Three companies reported reported Q 4 earnings last week. Their respective press releases can be found at the following links: AK Q4 2009 earnings, Nucor Q4 2009 earnings, US Steel Q4 2009 earnings.
The Nerds of Steel earnings spreadsheet has been updated to include these companies’ Q4 and 2009 full year operating income and EBITDA per ton numbers. Not surprisingly all three companies achieved much lower levels of EBITDA per ton in 2009 than they did in 2008. US Steel was negative for the year, but AK Steel and Nucor were modestly positive. Given that the US industry ran at close to 50% capacity utilization for the year, positive EBITDA may be considered an accomplishment.
Yes – finally we’re really back. We’re slightly redesigned, structurally improved and ready to bring you insight into, data from & news about the steel industry once again. It’s been a long road back. Anyone running a blog will tell you that as it grows – like any other construction – the maintenance issues increase in variety and complexity. Some of those issues caught up with us. Thanks to some great help from Bill Erickson we’re on a new host and all dressed up and ready to go again. In the process we have also repaired the RSS and email feeds which are once again available to bring the latest posts to your desktop. As well as signing up to the feed via one of the buttons in the header, it’s always better if you register.
Thanks for visiting. Make it a regular stop. We’ll try to make Nerds as easy to use and as full of use as possible.
Based on reported import licenses and as predicted in my earlier post, US long products imports declined 47% from 210,000 short tons in October to 112,000 tons in November. November 2008 long products imports were 173,000 tons.
While imports of merchant bar were flat, imports of all other products decreased each by over 30%. The largest volume decline was for wire rod, dropping 43% or 51,000 tons, 38,000 tons of which was due to Turkey’s exit from the market in November.
Import licenses recorded up to December 15th were 91,000 tons which indicates that full-month December licenses should be back up to about 200,000 tons.
