Supply chain outage slows steel production

24 January 2011

24 January 2011 | Lindsay Clark

Steel production fell in the UK last month largely down to supply chain problems.

Despite the increasing demand from the manufacturing sector, steel makers cut output in December by about 20 per cent compared with the previous month.

A statement from UK Steel, part of manufacturers’ body EEF, said the disappointing end to the year was largely because of steel supply chains running down stock levels in advance of the year-end. As a consequence, many steel companies introduced extended shutdowns and maintenance closures over Christmas.

UK steel production in 2010 increased by almost a quarter like-for-like during the year, on the back of a recovery in the global economy, according to figures from UK Steel, based on data from the Iron and Steel Statistics Bureau.

After adjusting for the mothballing of Tata Steels’ Teesside plant in February 2010, like-for-like output last year was 9.4 million tonnes compared with 7.5 million tonnes in 2009, an increase of 24.7 per cent.

UK Steel director Ian Rodgers said: "The strong improvement in steel output during 2010 was encouraging, and reflects the pick up in manufacturing activity experienced both in the UK and in our principal European export markets. Nevertheless production remained well below pre-recession levels.”

This year had started positively, he said.

Meanwhile research by the Financial Times published today shows that steel prices are set to climb by a third this year. The survey of 16 steel experts around the world – including six senior executives and 10 industry analysts – forecasts a year-on-year rise in prices by the end of 2011 of 32 per cent.

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