Steel Supports Recovery

One good way to measure the strength of the global recovery is with a steel yardstick.

At 124 million metric tons, global crude steel output last month was up 29 percent year over year due to growing demand, and it was nearly 10 percent above pre-recession levels in May 2007.

For the first five months of the year, worldwide production exceeded 580 million metric tons, according to World Steel Association figures. Mills have been running at above 80 percent capacity since February – compare that to the mid-60s in the same months of 2009.

China accounts for close to half of global production – 265 million metric tons so far this year, up more than 20 percent from the first five months of 2009. China is now on track to consume 600 million metric tons this year, but analysts expect demand to slow in the second half of this year in response to Beijing efforts to put the brakes on runaway growth.

But that’s a short-term sidebar to the long-term growth story, which is being driven in large part by the rapid middle-class expansion in China, India, Brazil and other key emerging markets.

Infrastructure specialists at Macquarie expect global steel production to increase by 339 million metric tons per year by 2014, and it says China will account for 59 percent of that growth.

About Frank Holmes 263 Articles

Affiliation: U.S. Global Investors

Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc., which manages a diversified family of mutual funds and hedge funds specializing in natural resources, emerging markets and infrastructure.

The company’s funds have earned more than two dozen Lipper Fund Awards and certificates since 2000. The Global Resources Fund (PSPFX) was Lipper’s top-performing global natural resources fund in 2010. In 2009, the World Precious Minerals Fund (UNWPX) was Lipper’s top-performing gold fund, the second time in four years for that achievement. In addition, both funds received 2007 and 2008 Lipper Fund Awards as the best overall funds in their respective categories.

Mr. Holmes was 2006 mining fund manager of the year for Mining Journal, a leading publication for the global resources industry, and he is co-author of “The Goldwatcher: Demystifying Gold Investing.”

He is also an advisor to the International Crisis Group, which works to resolve global conflict, and the William J. Clinton Foundation on sustainable development in nations with resource-based economies.

Mr. Holmes is a much-sought-after conference speaker and a regular commentator on financial television. He has been profiled by Fortune, Barron’s, The Financial Times and other publications.

Visit: U.S. Global Investors

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