Valuable insight comes in many forms.
The world's steel producers provide a most crucial conduit for timely insight into telltale economic activity, but they each go about it in their own characteristic style.
With a contrasting style, Korean steelmaker POSCO
POSCO's net income fell 16.8% compared with the previous quarter because of weakness in the Korean currency. Compared with the prior-year period, however, earnings rose 177.5% thanks to strong demand at home and among emerging markets. Crude steel production rose 17.3%, while exports of finished products declined 4.4%. Among the noteworthy sources of domestic demand is Korea's bustling shipbuilding industry; POSCO raised its 2010 outlook for the industry by 15%. .
Looking to all-important China, POSCO confirms that China's growth in steel production outpaced growth in demand through much of the first half. China's steel inventories remain elevated (at 15.7 million tons in June), export volumes are on the rise compared with the previous quarter. Imports of iron ore and met coal may have also gotten ahead of themselves, and a recent decrease in spot prices for both of these hot commodities has been felt by producers around the world. Nonetheless, undaunted by Peabody Energy's
Importantly, despite all the fear that recent signs of moderation in China's growth rate have caused, POSCO actually raised its outlook for full-year Chinese steel demand growth to 8% from 7%.
Globally, steel demand is forecast to grow at a 12% clip for 2010, with China alone accounting for 47% of the total. Although U.S. demand is expected to grow at a respectable 27% clip, this compares with the torturously low demand of 2009. If these projections hold true, U.S. steel demand would remain 25% below that of 2008, whereas China's uninterrupted growth will put its demand about 35% ahead of 2008 levels.
As POSCO has done, I will let the numbers in this case speak for themselves. I invite you to help your fellow readers to interpret them according to your own macroeconomic outlook by posting your comments below.