China steel output drops 13pct in January

Global steel production dropped in January and output in top producer China fell 13 per cent, data from a producers' body showed on Tuesday, as industrial demand remains weak and economic prospects are uncertain.

World crude steel production fell 7.8 per cent to 117 million tonnes in January, compared with the same month last year, the data from the World Steel Association showed.

China's crude steel output fell 13 per cent in the same period to 52.1 million tonnes.

"It's a hefty fall but it's a slight bounce back compared with last month," Macquarie steel and iron ore analyst Colin Hamilton said.

"Last year was phenomenally strong and the industrial sector looked to be accelerating rapidly while this year things don't look horrendous but demand from some industrial sectors such as Chinese construction is relatively weak."

The global crude steel capacity utilisation rate fell 9.6 per cent year-on-year to 71.3 per cent in January 2012 but it registered a slight rebound of 0.5 per cent compared with December 2011.

Steel production in Japan, the world's second-largest steelmaker, was down 10.6 per cent year-on-year to 8.6 million tonnes in January.

Last year the country's steel industry was hard hit by competition from other Asian producers and weaker domestic demand due to a migration of Japanese manufacturers to lower-cost Asia countries.

A strong yen has also affected Japan's export competitiveness and has weighed on Japanese steelmakers' profits.

In the United States, January steel production remained in positive territory: it rose 5.7 per cent to 7.6 million.

Steel demand in the world largest economy was relatively strong in the last few months and this has supported steel prices and production levels.

Demand from the EU industrial sector on the other hand, was still weak, clouded by a fragile economic outlook.

Steel production in the region fell 5.6 per cent in January to 13.9 million tonnes.

In view of the prolonged demand weakness in the region, ArcelorMittal, the world's largest steelmaker, has extended closures at some of its European plants.