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Although global crude steel production grew by 2.6% in May, the situation is nothing but grim. If one excludes the Chinese steel production, which grew 7.3% at 67 million tonne, the production is down by about 1%.
In fact, out of 60 key countries, 40 reported a decline in crude steel production for the month of May 2013. Importantly, big economies like European Union and the US reported a decline of 4.7% and 5%, respectively in their crude steel production. This trend in steel production is in line with the bearish outlook that many experts believe copper is signalling. Earlier in May 2013, market experts including the renowned global strategist Albert Edwards of Societe Generale said that copper is indicating that rally in the equity markets is over.
Copper is popular and got its doctorate for rightly predicting the health of economy because of its wider application in key industries including household goods, power, construction and many more. Lower copper prices mean lower demand from the user industries and that provides an early indication of falling economic activity. LME copper prices recently fell to its three-year low of $6,670 per tonne on Monday (June 24). Compared with the $8,700 per tonne price seen in January this year, the LME copper price is down 23%.
Steel to that extent is not as reliable an indicator as copper while gauging economic activities. Steel is largely consumed in construction and heavy industries. But, weakness in steel production in some of the key developing markets and the spread of weakness is a cause for worry and also speaks about the health of world economy. For instance, its not just the US and European regions, the trend in consolidated steel production figures of remaining European countries, erstwhile CIS and North American countries are equally worrisome. Notably, these regions put together account for almost 30% of world crude steel production and about 55% of world crude steel production excluding China.
Considering this wide spread decline in crude steel production and the decline in capacity utilisation (it has slipped to 79.6% compared to 80% in April 2013), it clearly points to weakening health of global economy. Steel prices, too, reflect the picture. Since January this year, the LME steel prices have fallen from around $300 a tonne to currently at $132.5 a tonne. Although China’s slowing growth is impacting overall production and prices, the trend is quite clear.
| no | Date | Copper ($ per tonne) (LHS) | Steel ($ per tonne) |
| 117 | 02/01/2013 | 8183.5 | 285 |
| 116 | 03/01/2013 | 8136.5 | 282 |
| 115 | 04/01/2013 | 8055 | 282 |
| 114 | 07/01/2013 | 8037.5 | 277 |
| 113 | 08/01/2013 | 8045.25 | 292 |
| 112 | 09/01/2013 | 8046 | 293 |
| 111 | 10/01/2013 | 8084.25 | 304 |
| 110 | 11/01/2013 | 8017 | 295 |
| 109 | 14/01/2013 | 7968 | 294 |
| 108 | 15/01/2013 | 7963.25 | 294 |
| 107 | 16/01/2013 | 7916 | 293.5 |
| 106 | 17/01/2013 | 8026.25 | 295 |
| 105 | 18/01/2013 | 8035.75 | 295 |
| 104 | 21/01/2013 | 8027 | 294.75 |
| 103 | 22/01/2013 | 8102.5 | 295.25 |
| 102 | 23/01/2013 | 8073 | 305.5 |
| 101 | 24/01/2013 | 8064.5 | 306.5 |
| 100 | 25/01/2013 | 7997.75 | 296.75 |
| 99 | 28/01/2013 | 8015.75 | 281.25 |
| 98 | 29/01/2013 | 8068.5 | 276.75 |
| 97 | 30/01/2013 | 8190.75 | 277 |
| 96 | 31/01/2013 | 8128.25 | 291.75 |
| 95 | 01/02/2013 | 8254.5 | 283 |
| 94 | 04/02/2013 | 8267.25 | 288.25 |
| 93 | 05/02/2013 | 8232.25 | 278.25 |
| 92 | 06/02/2013 | 8207.75 | 278.75 |
| 91 | 07/02/2013 | 8164.5 | 289.75 |
| 90 | 08/02/2013 | 8259.5 | 280 |
| 89 | 11/02/2013 | 8165 | 280.25 |
| 88 | 12/02/2013 | 8199.25 | 280 |
| 87 | 13/02/2013 | 8190.25 | 275.5 |
| 86 | 14/02/2013 | 8205.25 | 281.75 |
| 85 | 15/02/2013 | 8172 | 281.75 |
| 84 | 18/02/2013 | 8085.25 | 282 |
| 83 | 19/02/2013 | 8015.75 | 282 |
| 82 | 20/02/2013 | 7925.5 | 282.5 |
| 81 | 21/02/2013 | 7832.25 | 283.5 |
| 80 | 22/02/2013 | 7773.25 | 283.75 |
| 79 | 25/02/2013 | 7811.5 | 284 |
| 78 | 26/02/2013 | 7832.5 | 284.25 |
| 77 | 27/02/2013 | 7841 | 264.5 |
| 76 | 28/02/2013 | 7784 | 240.5 |
| 75 | 01/03/2013 | 7673 | 240.25 |
| 74 | 04/03/2013 | 7695 | 240 |
| 73 | 05/03/2013 | 7740.75 | 240 |
| 72 | 06/03/2013 | 7658 | 240 |
| 71 | 07/03/2013 | 7734 | 241 |
| 70 | 08/03/2013 | 7710.5 | 241.5 |
| 69 | 11/03/2013 | 7725.25 | 241 |
| 68 | 12/03/2013 | 7797.75 | 241 |
| 67 | 13/03/2013 | 7758 | 242 |
| 66 | 14/03/2013 | 7775.25 | 243 |
| 65 | 15/03/2013 | 7724.5 | 244 |
| 64 | 18/03/2013 | 7542 | 223 |
| 63 | 19/03/2013 | 7493.75 | 243 |
| 62 | 20/03/2013 | 7584.5 | 223 |
| 61 | 21/03/2013 | 7548.25 | 206.5 |
| 60 | 22/03/2013 | 7621.75 | 204.25 |
| 59 | 25/03/2013 | 7586 | 199 |
| 58 | 26/03/2013 | 7592.75 | 199 |
| 57 | 27/03/2013 | 7576.75 | 162.5 |
| 56 | 28/03/2013 | 7509.75 | 192.5 |
| 55 | 02/04/2013 | 7435.5 | 195 |
| 54 | 03/04/2013 | 7357.5 | 195 |
| 53 | 04/04/2013 | 7411.75 | 195.5 |
| 52 | 05/04/2013 | 7377 | 195.75 |
| 51 | 08/04/2013 | 7420 | 160 |
| 50 | 09/04/2013 | 7601.5 | 172.5 |
| 49 | 10/04/2013 | 7545 | 165.25 |
| 48 | 11/04/2013 | 7579 | 176.25 |
| 47 | 12/04/2013 | 7374.9 | 181.5 |
| 46 | 15/04/2013 | 7168.25 | 161.5 |
| 45 | 16/04/2013 | 7266.5 | 151.75 |
| 44 | 17/04/2013 | 7047.5 | 172 |
| 43 | 18/04/2013 | 7061 | 157.5 |
| 42 | 19/04/2013 | 6961 | 152.5 |
| 41 | 22/04/2013 | 6906.5 | 152.25 |
| 40 | 23/04/2013 | 6842 | 152.25 |
| 39 | 24/04/2013 | 7000.75 | 152.25 |
| 38 | 25/04/2013 | 7149 | 143 |
| 37 | 26/04/2013 | 6998 | 143 |
| 36 | 29/04/2013 | 7120.5 | 132.75 |
| 35 | 30/04/2013 | 7021.25 | 132.75 |
| 34 | 01/05/2013 | 6761.75 | 108 |
| 33 | 02/05/2013 | 6818 | 136.5 |
| 32 | 03/05/2013 | 7243.75 | 144.25 |
| 31 | 07/05/2013 | 7238.75 | 144 |
| 30 | 08/05/2013 | 7394.25 | 144 |
| 29 | 09/05/2013 | 7331 | 145 |
| 28 | 10/05/2013 | 7355.5 | 150.25 |
| 27 | 13/05/2013 | 7388.5 | 150 |
| 26 | 14/05/2013 | 7216 | 150.5 |
| 25 | 15/05/2013 | 7169.5 | 150 |
| 24 | 16/05/2013 | 7250.75 | 150.75 |
| 23 | 17/05/2013 | 7274.5 | 151 |
| 22 | 20/05/2013 | 7367.25 | 141 |
| 21 | 21/05/2013 | 7338.5 | 166.25 |
| 20 | 22/05/2013 | 7444.5 | 151.5 |
| 19 | 23/05/2013 | 7270.5 | 144.75 |
| 18 | 24/05/2013 | 7269.75 | 147.5 |
| 17 | 28/05/2013 | 7290.75 | 147 |
| 16 | 29/05/2013 | 7232 | 140.25 |
| 15 | 30/05/2013 | 7286.75 | 141 |
| 14 | 31/05/2013 | 7280.75 | 161.25 |
| 13 | 03/06/2013 | 7309.25 | 140.5 |
| 12 | 04/06/2013 | 7423.25 | 141 |
| 11 | 05/06/2013 | 7422.25 | 141.25 |
| 10 | 06/06/2013 | 7301.25 | 141.75 |
| 9 | 07/06/2013 | 7198 | 142 |
| 8 | 10/06/2013 | 7128.75 | 136.5 |
| 7 | 11/06/2013 | 7030.5 | 136.5 |
| 6 | 12/06/2013 | 7087 | 136.5 |
| 5 | 13/06/2013 | 7018.5 | 137 |
| 4 | 14/06/2013 | 7056.25 | 132 |
| 3 | 17/06/2013 | 7047.75 | 132 |
| 2 | 18/06/2013 | 6969.75 | 137 |
| 1 | 19/06/2013 | 6925.75 | 132.5 |
Source: Bloomberg data
