Global and Chinese crude steel production slowed in October to their lowest levels in 10 months, figures from the World Steel Association this week confirmed.

The gloomier economic outlook in Europe has forced many steelmakers to cut production to tackle weakening demand and steel prices.

The world crude steel capacity utilisation ratio of the reporting 64 countries to the Association in October 2011 fell to 76.5% (See above graph).

That's 2.2 percentage points down from September 2011 and the lowest point of the year to date.

Compared to October 2010, the utilisation ratio in October 2011 increased by 1.0 percentage point and it's a clear sign of the slowdown in demand and now production.

The capacity utilisation figure was 83.3% in January and February of this year, so the fall in the remaining eight months has been steady, but so far unending.

The way the graph is trending, capacity utilisation will test the 73.6% low of the past two years which was hit 11 months ago.

It helps explain the slide in global iron ore prices, and the recent weakness in the prices of major resource groups such as BHP Billiton, Rio Tinto and Fortescue.

In China output has been trimmed in the face of the tightened domestic economic conditions and a slowing in sales of cars and whitegoods, as well as contracting construction and railway work.

According to the Association's data, world crude steel production for the 64 countries reporting to the World Steel Association (worldsteel) was 123.979 million metric tons (mmt or tonnes) in October.

That was 6.2% higher than October 2010 and just a million tonnes more than the 122.9 million tonnes produced in September.

China's crude steel production for October 2011 was 54.7 mmt, an increase of 9.7% compared to October 2010, but down sharply on the 56.7 million tonnes in September and the 60 million tonne peak of May.

Global October annualised steel production at about 1.45 billion tonnes was still well above 2010's record production levels of 1.41 billion.

Europe's steel output at 15.273 million tonnes in October was 1.1% lower than the same month last year but up 3% from September's 14.674 million tonnes.

But it is likely to dip this month and December as a number of steel groups, led by Arcelor Mittal, have announced production cuts in the last few weeks.

Elsewhere in Asia, Japan produced 9.5 mmt of crude steel in October 2011, a slight decrease of 0.3% compared to the same month last year.

Japan's October output was up 6% from September as the reconstruction work for the north east coast, damaged in March's quake and tsunami, finally starts having an impact.

South Korea's crude steel production for October 2011 was 6.1 mmt, 17.8% up compared to October 2010. It was also 12% up on September.

In the EU, Germany's crude steel production for October 2011 was 3.68 mmt, down 4.2% on October 2010, but about steady with September.

Italy produced 2.7 mmt of crude steel in October 2011, 9.6% higher than October 2010 and up 10% from September.

France produced 1.4 mmt of crude steel in October 2011, 2.8% up compared to October 2010 and up 8% from September.

Turkey produced 3.1 mmt of crude steel in October 2011, 12.3% higher than October 2010.

The US produced 7.29 mmt of crude steel in October 2011, an increase of 11.5% compared to October 2010, but only up less than 1% from September.

Brazilian crude steel production for October 2011 was 2.9 mmt, 2.7% lower than October 2010. It was up slightly from October.

World Steel said estimated Australian crude steel output in October was 565,000 tonnes, about steady with the 562,000 in September, but down 10% from the 631,000 tonnes of October 2010.

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