Recovery In Sight For Global Steel Demand

The World Steel Association is forecasting that apparent steel use will contract worldwide by 8.6% to 1,104 million tonnes in 2009 after declining by 1.4% in 2008.

This is an improved figure over the association’s April 2009 forecast, which predicted a decrease of 14.1%. The improvement is largely due to the exceptionally strong growth in steel demand in China.

With signs, from the beginning of the second half of 2009, of a recovery across the world now apparent, global steel demand in 2010 is forecast to grow by 9.2% to 1.2 billion tonnes — which is a recovery to the level of 2008.

According to the association’s current forecast, China will rebound 19% in 2009 and 5% in 2010. Emerging economies will slow down 17% in 2009, to grow 12% in 2010.

Apparent steel use in developed economies, which contracted 34% in 2009, will rebound 15% in 2010. Accordingly, the World Steel Association forecasts that global steel demand will return to growth in 2010 but this is expected to be moderate.

As before the financial crisis, the emerging economies, especially China, will be the critical driver of world steel demand in the near future.

The chairman of the World Steel Assocation’s economics committee, Daniel Novegil, says that while the state of the global economy has improved, “uncertainties and concerns regarding the resilience of the recovery still remain with the possibility of any premature reduction in government stimulus actions.”

This uncertainty particularly exists for the Chinese economy in 2010, whose “fast recovery in 2009 was largely enabled by such strong government stimulus policies.”

China’s apparent steel use in 2009 is expected to increase by 18.8% to reach 526 million tonnes, and the nation is expected to account for 47.7% of world steel apparent use. Excluding China, potential world steel demand would have fallen by 24.4%.

India also remained relatively resilient to the global crisis and apparent steel use there is expected to grow by 8.9% in 2009 and 12.1% in 2010.

The Canada-U. S.-Mexico (NAFTA) region is expected to show a 35.8% decline in apparent steel use this year and then a 17.1% growth next year. Apparent steel demand in the U. S. is likely to fall by 38.7% to 60 million tonnes in 2009 after falling by 8.2% in 2008. It should recover to 72 million tonnes in 2010 with a growth rate of 18.8%.

The 27 European Union economies were also severely affected by the crisis and the region’s apparent steel use is expected to fall by 32.6% in 2009 to 122 million tonnes. Next year, the apparent steel use in the EU-27 is expected to grow by 12.4%.

For both North America and EU-27, the level of apparent steel use that is expected in 2010 amounts to what was achieved in 1991, demonstrating the severity of the impact of the crisis on the steel industry.

In 2009, Japan will see its apparent steel use decline by 31.3%, but that is expected to recover by 15.8% in 2010 to reach 61 million tonnes.

Apparent steel use in the Commonwealth of Independent States is expected to contract by 30.8% in 2009 and should grow by only 8.2% in 2010.

— The preceding is an abridged version of astatement by the World Steel Association(www.worldsteel.org).