Steel production

Trent Ernst, Editor

 

The fortunes of metallurgical coal produced in Tumbler Ridge are inextricably linked to the steelmaking industry.

Prices for coal have risen in the last few months as steel producers have taken the opportunity to resupply their stockpiles, and things are looking good for the industry, according to Michelle Mondeville, director of communication for the Coal Association of Canada, who presented at the Coal Forum.

The figures were based on figures from the World Steel Association, which recently released its short range outlook for 2014.

According to a release from the association, which represents about 170 steel producers from around the world, or approximately 85 percent of the world’s supply, the industry will grow about 3.3 percent to 1,532 Million tonnes (Mt) next year.

That’s up from 2013, which should see about 1,475 Mt produced by the end of the year.

That growth, says Hans Jurgen Kerkhoff, chairman of Worldsteel’s economics committee, is still being driven by demand from China.

“In 2014, we expect to see continued recovery in global steel demand with the developed economies overall returning to positive growth,” says Kerkhoff. “At the same time we expect slower growth in China. With risks within the developed world receding there is some uncertainty emerging from developing countries due to unresolved structural issues, political instability and volatile financial markets. All in all, despite economic conditions for the global steel industry remaining uncertain and challenging, we are forecasting further growth for steel demand in 2014.”

In 2012, steelmaking in China grew by 2.9 percent. In 2013, that growth rate jumped to six percent, or an estimated 699.7 Mt, nearly half the entire global market.

Another bright spot is India, where steel demand is expected to grow by 5.6 percent next year. In 2013, India is expected to make about 74 Mt of steel.

Elsewhere, the news isn’t so bright. Japan’s steelmaking market is expected to shrink by 1.6 percent. In the European Union, output has dropped in 2012 and 2013. In 2014, demand is expected to pick up slightly, increasing by 2.1 percent.

In North America, Steel production is expected to be up slightly by the end of this year, growing a mere 0.2 percent. However, in 2014, that should pick up to 3.2 percent.

While metallurgical coal prices are tied to steel production, they are not in lock step, as the decline in met coal prices during the first half of this year came at the same time as steel production was increasing.

The latest prices put met coal at about $148/tonne on the spot market.