World Steel Releases Steel Outlook

The World Steel Association (Worldsteel) has released its short-range steel outlook for 2010 and 2011. The association forecasts that apparent steel use globally will increase by 10.7 percent to 1.241 million metric tons this year. The expansion comes on the heels of 2009 when global steel production contracted by 6.7 percent.

With these projections, world steel demand this year is expected to exceed pre-crisis levels of 2007. In 2011, it is forecast that world steel demand will grow by 5.3 percent to reach a historical high of 1.306 billion metric tons. The resilience of the emerging economies, especially China, has been the critical factor enabling the earlier than expected recovery of world steel demand.

During a recent meeting of the Worldsteel Economics Committee, a significant concern for the global steel industry has been the impact of the increase in raw material prices. The risk of increased volatility of raw material prices remains a major concern to the steel industry and its customers.

“The general picture is an improvement on the forecast we issued in October last year. The world steel industry now seems firmly set on a path to recovery,” says Daniel Novegil, chairman of Worldsteel’s Economics Committee.

“The emerging economies, who in total maintained positive growth through the crisis, will continue to show strong growth, driving world steel demand in the future. However, the current recovery in the major developed economies is slower, and the projected steel demand for them in 2011 is well below the 2007 level,” Novegil adds.

“The recovery is not only earlier, but also stronger than expected. It was driven in large part by government stimulus packages and recent inventory restocking. The real concern will be how post-crisis macroeconomic policies deal with fiscal balancing and inflationary pressures,” Novegil says.

Broken out by individual geographic regions, Worldsteel expects China’s apparent steel use this year to increase by 6.7 percent to 579 million metric tons. This follows a 24.8 percent increase in steel use last year. The pace of economic growth and steel production seen during the first quarter of this year suggests that apparent steel use could be even higher than this forecast.

In 2011, the growth rate will slow to 2.8 percent, which will bring China’s apparent steel use to 595 million metric tons. In 2011, China will account for 45.5 percent of world apparent steel use, compared to 48.4 percent in 2009.

India’s steel demand held steady last year, and is expected to grow by 13.9 percent and 13.7 percent in 2010 and 2011, respectively, after a 7.7 percent increase last year. In 2011, India’s apparent steel use will reach 71.6 million metric tons.

In the NAFTA region, apparent steel use in the United States declined by 41.6 percent in 2009 to a reported 57.4 million metric tons. With the recovery in the U.S. economy and stock rebuilding, apparent steel use is expected to grow by 26.5 percent in 2010, followed by 7.5 percent to 78.1 million metric tons in 2011, bringing its apparent steel use back to 1991 levels.

European Union economies saw a 35.2 percent drop in steel use last year, with Spain and Italy hardest hit by the collapse of their construction sectors. In 2010, the region is expected to see an increase of 13.7 percent in steel demand due to inventory rebuilding and a slight increase in real steel use. In 2011, real demand will drive the recovery and apparent steel use is expected to grow by 7.9 percent to reach 145.2 million metric tons, bringing it back to the level of 1997.

Japan, which experienced a fall in apparent steel use of 31.7 percent last year, will see its steel use increase by 10.3 percent this year. For next year, Worldsteel forecasts Japan’s steel demand is expected to remain flat, declining by around 0.2 percent growth due to weakening of its major steel using sectors. This brings Japan’s apparent steel use in 2011 to 58.6 million metric tons, the level achieved in 1983.

The CIS region was another sector that suffered during the economic problems in 2009, saw steel use drop by 28.2 percent in 2009. In 2010, apparent steel use in the CIS region will grow by 11 percent and then by 8 percent in 2011.

Turkey, which experienced a-9.4 percent decline in apparent steel use in 2009, will see an increase of above 13 percent in 2009 and 2010.

The Middle East region continued to record positive growth in steel use in 2009 despite significant falls in the United Arab Emirates and Saudi Arabia. The region’s better-than-average performance, despite the decline in the oil price, is attributable to the strength of Egypt and Iran. The region will maintain relatively resilient growth in 2010 and 2011 with apparent steel use reaching 68.2 million metric tons in 2011.