Worldwide crude steel output fell slightly between January and February, but remained above the February 2012 level. However, U.S. steel production declined on both a month-to-month and year-over-year basis.

Global crude steel production inched down from 125 million tons in January to 123 million tons in February, according to the latest report from the World Steel Association (worldsteel). Despite the monthly drop, total steel production for the 63 countries tracked by worldsteel – representing approximately 85 percent of global steel output – remained 1.2 percent above the total for February 2012.

Although production was down, steelmakers expanded operations, with the capacity utilization rate among steel manufacturers climbing to 80.5 percent from 76.7 percent in January. Compared to February 2012, capacity utilization was 0.8 percentage points lower.

The latest figures indicate that steel production is on a modest downward swing in most of the major steel-producing regions of the world, continuing the relatively weak start to 2013 for the global steel industry. The only sizable gains last month were in China.

Steel output from China, the world’s largest steel producer, rose to 61.8 million tons in February, up from 59.3 million tons in January and representing a 9.8 percent gain over the total for February 2012.

“Growth in demand for steel in China, the world’s biggest consumer, is set to rebound from a four-year low, supporting earnings for mills and the iron ore producers that supply them,” Bloomberg News reports. “Apparent consumption, which includes production and net imports, may rise 4.6 percent to 708.8 million metric tons in 2013…That’s up from 2012 when demand grew by 2.9 percent to 677.8 million tons.”

Elsewhere in Asia, Japanese production totaled 8.3 million tons of steel, down from 8.8 million tons in January and 3.4 percent below the prior-year level. South Korea’s crude steel production for February fell to 5 million tons, down from 5.8 million tons the previous month and 8.5 percent down from February 2012.

So far this year, Asian countries have produced 169.7 million tons of crude steel, 7.3 percent more than in the first two months of 2012.

Meanwhile, major steel producers in the European Union mostly posted losses in output. Germany’s crude steel production totaled 3.4 million tons in February, down from 3.6 million tons in January and 3.7 percent less than in February 2012. France produced 1.3 million tons, down slightly from 1.4 million tons in January and 1.3 percent below the level for the same month last year.

Manufacturers in the E.U. produced a combined total of 27 million tons of crude steel in the first two months of 2013, a 4.5 percent decrease from the same period last year.

In line with the broader global slowdown, monthly crude steel output in the U.S. dropped to 6.7 million tons in February, down from 7.3 million tons in January and 11.8 percent below the total for February 2012. So far this year, U.S. steelmakers have produced 14 million tons of crude steel, 8.1 percent less than in the same period last year.

U.S. steel products are also experiencing decline, with steel product shipments from metals service centers falling to 3.36 million tons in February, down 7.6 percent from January and a drop of 7.9 percent from February 2012, according to the Metals Service Center Institute (subscription required). In the first two months of 2013, shipments totaled 7 million tons, a decline of 5 percent from the same period last year.

Meanwhile, steel product inventories fell to 8.5 million tons at the end of February, a 2.6 percent decrease from January and a 4.6 percent drop from February 2012. This represents the equivalent of 2.5 months of supply at current shipping rates.

“The steel market in 2013 is off to a slow start, but signs of strength in some of the most important steel consuming market such as autos and energy (with a large inventory overhang at this point), provide some reason for optimism as we move into the usually seasonally stronger second quarter,” David Phelps, president of the American Institute for International Steel, noted.

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