By Maximilian Clarke

UK steel output in 2011 ended the year just 0.8% higher than in 2010 as the eurozone crisis and economic uncertainty in the second half of the year badly affected demand as customers ran down stocks.

However, steel demand is forecast to pick up this quarter on the back of restocking in supply chains and the current increase in the price of steel is reflecting this more positive outlook.

According to data from UK steel, a division of EEF, the manufacturers’ organisation, output per week in 2011 was 182,298 tonnes per week compared to 180,850 tonnes per week in 2010.

“After an improvement in the first half of last year, steel demand could not escape the nervousness in key customer sectors about the strength of both the UK and Eurozone economies,” commented Ian Rodgers, Director of UK Steel. “However this low output level is not an accurate indication of the underlying level of consumption. Stocks in supply chains are now at very low levels, and re-stocking in the first quarter is expected to help drive a recovery in steel output.”

The extent of the impact of the eurozone crisis towards the end of the year was shown by the fact output in Q4 2011 was 7.7% below the previous quarter (168,192 tonnes per week compared to 178,485 tonnes per week). This was also 0.5% below Q4 in 2010 (171,739 tonnes per week) and the lowest quarterly steel output since the depth of the recession in Q1 2009 (162,139 tonnes per week).

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