1. record Output in 1997
2. Lower Production in 1998

WORLD STEEL PRODUCTION

1997 will be a record year for steel output. We expect global steel production to reach 794.5 million tonnes - 46 million tonnes (6.1 percent) above the outturn in the previous year. Production in 1998 will be down. We forecast world steel output at 789 million tonnes - 5.5 million tonnes below the anticipated outturn in the previous year. It is, however, possible that the output in 1998 could be lower if the Asian crisis intensifies.

Worldwide pig iron production is estimated at 547.5 million tonnes in 1997 - 5.2 percent (27 million tonnes) above the level a year earlier. In 1998 output is forecast to be down 4.5 million tonnes compared to 1997. The flat products sector has been firm for most of 1997 and the blast furnace mills have been able to operate at near to maximum capacity. The market in 1998 will not be as buoyant.

The exceptionally high rate of steel production continued into the final quarter of 1997 in most industrialised nations of the world. A modest slowdown was noted in some Asian countries.

We have been surprised at the continued strength in the global steel scene. The Asian economic problems have been apparent for a number of months. Industrialists in North America and Western Europe believe that the Asian problem will have little impact on their situation. Most of manufacturing industry in these regions is maintaining output at the levels planned in the Summer. Consequently, the steelmakers are not yet seeing any change in their order patterns.

Despite the optimism of many industrialists in the developed countries, we believe that steel demand will fall in 1998 compared to the previous year. The first half will probably continue at a strong rate. The second half will be much lower. Asian governments are cutting back on a range of prestige capital projects. Auto demand is down. Many Asian companies are reducing capital expenditure in 1998. Steel demand in the region will fall.

WORLD CRUDE STEEL PRODUCTION