Global steelmaking is running out of control and production cuts will have to be implemented soon to stop the industry racing into the abyss.
The warning about oversupply came this week from steel consultancy and report company MEPS (Europe) Limited of Sheffield.
In its quarterly report on world steel outlook, MEPS argues that the steel sector is heading for a price collapse similar to the 1998 debacle unless action is taken soon.
It records that world crude steel production during the first eight months of this year increased by more than 50 million tonnes (10%) compared to the same period in 1999.
A statement from MEPS said: “We believe that many steel executives recognise the problems ahead. Output curbs are likely to be made during the final quarter of the year – particularly in the industrialised nations.”
In anticipation of some mills reigning back their production schedules the consultancy is forecasting total steel output at 840 million tonnes this year – 56 million tonnes or 7.2% above the 1999 figure. But, it notes that steelmakers in
the developing and emerging nations, which depend heavily on exports, will continue their high levels of output. This could result in a 60 million tonne jump in steel manufacturing higher. The mills in South and East Asia are also expected to lift output in the last quarter of the year to meet rising demand.
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