Improving manufacturing indices in the US and the EU has led to the increased demand; worldwide production up 5.3% to 119 million metric tonnes in January compared with 113 million metric tonnes during the same month of the previous year

World crude steel production spiked 5.3% to 119 million metric tonnes (MMT) in January compared with 113MMT during the same month of the previous year on the back of growing demand from developed countries.

"Generally, the first quarter of a calendar year is seen as strong from the demand point of view. Now, we are seeing growing demand from developed economies such as the US and European countries, and that is leading to an increase in production activities," Alok Kumar Nemani, an analyst with Nomura Financial Advisory and Securities (India) Pvt Limited, told Moneylife.

Manufacturing activity in the US, Europe and China has been moving northwards. According to the Institute for Supply Management (ISM), the index of manufacturing activity in the US rose to 60.8 in January, from 58.5 in December. The Market PMI for the eurozone rose to 57.3 in the last month, from 57.1 in December 2010. The HSBC China Manufacturing PMI edged up to 54.5 in January, from 54.4 in December 2010.

According to data published by the World Steel Association (worldsteel), crude steel production in the US rose 9.4% to 6.8MMT in January compared with January 2010.

Worldsteel members produce around 85% of the world's steel. The EU has reported an increase of 4% to 14.2MMT in January, compared with the year-earlier month, added the worldsteel statement. Germany's crude steel production for January 2011 was 3.7MMT, an increase of 4.4% compared to January 2010.

Turkey produced 2.7MMT of crude steel in January 2011, a 33.4% increase over the same month in 2010.

"In Europe, demand for the automobile & engineering sectors looks firm in 2011 while the construction sector may remain weak this year," Karl-Ulrich Kohler, managing director and chief executive officer of Tata Steel (Europe) had said earlier this month.

In January, the world crude steel capacity utilisation ratio was 75.6 % from 73.3% in December 2010. However, the utilisation ratio was 0.4 percentage points lower than January 2010.

Maintaining the current production rate, the world largest steel producer and consumer, China, produced 52.80MMT in January, which is just 0.5% higher than January 2010.

"China's growth was flat in January. Now Chinese steelmakers will gear up for production as their new year and holidays are over," added Mr Nemani.

China's Ministry of Industry and Information Technology (MIIT), in its statement said, "The country is expected to produce 660 million tonnes of crude steel this year from 626.70 million tonnes last year on the back of surging demand from construction, machinery, home appliances and shipbuilding."

However, the China Iron and Steel Association reported that the country's daily crude steel production has dropped 5.4% to 1.695 million tonnes in the second 10 days of January, from the previous 10 days, due to regular equipment repairs and occasional production incidents at mills.

India is the world's fifth largest steel producer. The country's crude steel production in January went slightly down by 0.6% to 5.60MMT, compared with January 2010.

"Production growth has not changed in the last month. Ideally, it should pick up momentum in February and March, as government projects get completed, and they have to meet targets," added Mr Nemani.

Other Asian countries-like Japan and South Korea-have recorded an impressive growth in production. Japan produced 9.7MMT of crude steel in January 2011, up 10.7% compared to the same month last year. South Korea showed an increase of 24.2% from January 2010, producing 5.60MMT of crude steel in January 2011.