Steel Production Soars

Global crude steel production hit a record high of 1.24 billion tons in 2006, an increase of 10 percent over 2005.1 (See Figure 1.) This was the third consecutive year in which crude steel output exceeded 1 billion tons.2 China was by far the leading producer, with 419 million tons output in 2006—just above one third of the global total.3 The other major producers were Japan (116 million tons) and the United States (99 million tons), followed by Russia and South Korea.4 (See Figure 2.)

The past decade has been the most productive in the history of the steel industry, driven mainly by remarkable growth in China and the Asia region. Global output in 2006 was 65 percent above the figure a decade earlier.5 China became the largest national producer in 1996, and 10 years later output there was a startling 314 percent higher.6 The Asia region accounted for 38 percent of all crude steel produced in 1996; by 2006, the share rose to 54 percent.7

Consolidation in the steel industry worldwide has accelerated as producers look to integrate horizontally with other mills and vertically with raw material suppliers and steel distributors to secure their futures.8 In 2005 the top 15 steel producers accounted for one third of world production, compared with just over one fourth in 1995.9 (See Figure 3.)

The recent race toward consolidation has been highlighted by a few major takeovers. In June 2006 Mittal Steel took over the Pan-European Arcelor and became the largest steelmaker in the world.10 The new firm, Arcelor-Mittal, has more than 100 million tons of annual capacity— enough for twice as many automobiles as are made in the world every year and three times the capacity of its nearest rival, Nippon Steel.11 The second major merger took place in early 2007, when an Indian conglomerate—Tata Steel—acquired the Anglo-Dutch steel firm Corus and created the world’s fifth biggest steel producer.12 Similar takeovers and mergers also happened in the United States, Europe, Russia, China, East Asia, and Australia.13

The rebounding world economy combined with buoyant infrastructure and other investments in developing economies pushed global steel demand up in 2006.14 Demand jumped an estimated 9 percent in the year, with China and, more generally, Asia again being the major driving forces.15 Demand for steel in China rose by 15 percent in 2006, accounting for one third of the global total.16 Increased spending on infrastructure and construction in India drove steel use there up by 10 percent.17 Demand for steel also rose considerably in the European Union, North America, East Asia, and Russia, though at more moderate rates.18

Rising global demand has stimulated trade as well. In the first nine months of 2006 China became the world’s largest steel exporter for the first time, surpassing Japan, Russia, and the European Union.19 China’s net exports for the year reached 24.5 million tons.20 North America and the European Union remained the key steel-importing regions, with each estimated to bring in around 40 million tons a year.21

Recycled iron and steel scrap is a vital raw material, and the rate of recycling has risen remarkably in industrial countries. The recycling rate for steel reached 76 percent in the United States in 2005, the highest ever recorded there.22 In 2006 an estimated 55 million tons of steel were recycled in the United States.23 The latest available data show that the U.S. recycling rate in 2005 for automobiles—the primary source of old steel scrap—was 102 percent, indicating that more steel was reclaimed from automobiles than was used to manufacture new vehicles.24

The U.S. recycling rates for appliances and steel cans in 2006 were 90 percent and 63 percent, respectively.25 Worldwide, more than 5 million tons of steel cans were recycled in 2005, an average recycling rate for steel packaging of 65 percent.26 This figure is 7.4 percent higher than in 2001, signaling a continuous increase over the years.27