Anticipating a strong growth in demand for steel, steelmakers have taken steps to boost their production around the world this week. On Wednesday, the world's largest steelmaker, ArcelorMittal ( MT), signed a preliminary agreement with its Turkish partner Dayen to produce 500,000 tons of steel-reinforcing bars annually in Iraq. Construction of the mill will start in the second quarter this year, while production is scheduled to start in the fourth quarter of 2011. Meanwhile, Asia's biggest steel maker, Posco ( PKX), announced a $200 million expansion of a Vietnam plant to boost capacity from 85,000 tons to 200,000 tons. Chief Executive Chung Joon Yang is planning a record $8.2 billion capital spending this year. Leading Russian steel maker Mechel OAO ( MTL) announced Monday that it is establishing a representative office in China to manage expansion of the company's business in the country. At least three U.S. wire rod producers have announced price increases for April on the back of a significant increase in scrap costs this month. U.S. domestic cold-reduced coil prices reached $631 per short ton on Tuesday, a remarkable increase of more than 14.9% during 2010, surpassing the increase in world steel prices. Meanwhile, world hot-rolled coil prices reached $639 per MT on Tuesday, an increase of around 13.4% during the year. The American Iron and Steel Institute (AISI) reported Monday that U.S. Steel producers were running at 70.9% utilization rates. In comparison, utilization rates reported on the same day last year and last month were 40.9% and 68%, respectively. Weekly steel production reached 1.71 million tons, an increase of 1.9% over the previous week. According to the Metal Service Center Institute's latest activity report, U.S. service centers shipped 2.66 million tons of steel in February, up 3.3% over January, and represents the highest level in the past 14 months. At the end of February, steel inventories at U.S. service centers reached 6.48 million tons of steel, or 2.4 months of supply. February inventories were up 3.6% over January but down 22% as compared to last year. "The run-up in steel prices is forcing a lot of buying, and the underlying confidence in the economy has a long way to go," the owner of a Plains states steel warehouse told market research firm Metal Bulletin.
Schnitzer Steel ( SCHN), ArcelorMittal and Gerdau Ameristeel ( GNA) led the pack of gainers this week, appreciating 2.73%, 2.66% and 1.14%, respectively. During this week, major U.S. steel producers U.S. Steel ( X), AK Steel ( AKS),and Nucor ( NUE) lost 0.75%, 0.52%, and 0.38%, respectively, whereas Steel Dynamics ( STLD) gained 0.28%. Chinese steel prices continued their upward trend on the back of a strong domestic demand and on the signs of increase in iron ore prices. China domestic cold-rolled steel sheet prices touched 6,013 yuan per MT Wednesday, up 5.7% during this month and 39.3% higher than February prices. China domestic hot-rolled steel sheet prices reached 4,263 Yuan per MT Wednesday, a significant raise of 9.4% during this month. Meanwhile, China domestic steel rebar 25mm prices increased 8.5% during this month, reaching 4,107 yuan per MT Wednesday. China Steel, Taiwan's largest steel producer is set to increase June prices for domestic customers by at least $50 per MT in order to match the increase in production costs, according to reports. China's Wihan Iron and Steel raised April prices for hot- and cold-rolled steel by 300 yuan a ton. The country's biggest steel producer Baosteel raised the prices of steel wire rod by 150 to 300 yuan per ton for April, according to China Daily. Meanwhile, Indian domestic hot-rolled coil producers have increased the prices by over 3% over the last two weeks, reported Metal Bulletin.