Steel Association Forecasts Strong Growth in 2010

While the World Steel Association is forecasting that apparent steel use will decline on a global basis by 8.6 percent to 1.104 billion metric tons this year after declining by 1.4 percent last year, the decline is not as significant as one that was forecast earlier this year. A survey in April 2009 had expected steel production to decline by 14.1 percent.

The association attributed the improved forecast to 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 percent to 1.206 billion metric tons, which is a recovery to the level of 2008.

Daniel Novegil, chairman of Worldsteel’s Economics Committee said: "The global recovery is stronger than we predicted in April. According to our current forecast, China will rebound 19 percent in 2009 and 5 percent in 2010. Emerging economies will slow down 17 percent in 2009, to grow 12 percent in 2010. Apparent steel use in developed economies, which contracted 34 percent in 2009, will rebound 15 percent in 2010.

"Therefore, world steel 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 factor in driving world steel demand in the near future.

Despite the expectations of an improved steel market, Worldsteel hedged its outlook. "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," Novegil added.

China’s apparent steel use in 2009 is expected to increase by 18.8 percent to reach 526 million metric tons. China is expected to account for 47.7 percent of world steel apparent use: excluding China, potential world steel demand would have fallen by 24.4 percent in 2009.

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

The NAFTA region is expected to show a 35.8 percent decline in apparent steel use in 2009 and then a positive 17.1 percent growth in 2010. Apparent steel demand in the US is likely to fall by 38.7 percent to 60 million metric tons in 2009 after falling by 8.2 percent in 2008. It should recover to 72 million metric tons in 2010 with a growth rate of 18.8 percent.

The EU-27 economies were also severely affected by the crisis and the region’s apparent steel use is expected to fall by 32.6 percent in 2009 to 122 million metric tons. In 2010, the apparent steel use in the EU-27 is expected to grow by 12.4 percent.

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

Japan will see its apparent steel use decline by 31.3 percent in 2009, but is expected to recover by 15.8 percent in 2010 to reach 61 million metric tons by 2010.

Apparent steel use in the CIS region is expected to contract by 30.8 percent in 2009 and grow by only 8.2 percent in 2010.