With demand for steel weakening in China and Europe, the global market for the key building and civil construction input continues to deteriorate. Production levels have been declining, oversupply has worsened and prices have fallen as Chinese manufacturers flood global markets with excess stock, the latest report suggests.
On a national scale, while overall steel manufacturing volumes in Canada remain stable longer term, output dropped back in August.
The overall volume of crude steel produced throughout the world last month dropped by 1.7 per cent from the same month in 2011, falling to 123.7 million tonnes according to the August 2012 Crude Steel Production report from the World Steel Association (WSA).
While output levels remain reasonably high in a historic context, up 9.1 per cent over the same month in 2010, overall production levels first eight months of this year have only nudged up by 0.9 per cent compared to the same period last year, indicating that long term production levels have flattened out.
Steel oversupply continues to worsen, as the global capacity utilisation ratio last month sat at 75.5 per cent, meaning the world is currently using only three-quarters of the steel it produces. This figure was down from 78.7% per cent in August.
With supply and surplus high, prices continue to fall. The All Products Global Composite Steel Price came at 730 in August, lower than at any other time over the past two years.
Canadian production levels were no exception to the decreasing demand. Production was down 3.2 per cent last month compared to the same month last year and 15.8 per cent compared to August, 2010. Though this suggests output volumes last month were relatively low, year-to-date figures indicate that steel manufacturing activity throughout the country is up 2.7 per cent so far this year. This suggests longer-term production levels will likely remain relatively steady amid a reasonably strong building sector and a respectably well-performing economy.
More broadly, recent figures suggest general manufacturing conditions for building products in Canada remain stable to good, though anecdotal evidence suggests that materials which are widely used in civil construction are outperforming those whose primary use is in building.
At 6.753 billion metric tonnes, the overall value of cement products produced throughout the country over the year to July, for example, is up by 6.8 per cent compared to the previous year (Statistics Canada). Production of asphalt roofing products, meanwhile, has contracted by 1.2 per cent over the same period.
