Global demand for steel is poised to rise by 6% this year and next as demand from China and other emerging economies continues to ‘increase steadily,’ the Organisation for Economic Co-operation and Development said.

Infrastructure investments, industrialisation and further urbanisation has supported demand in many emerging economics, the international organisation said following a meeting of the OECD’s Steel Committee in Paris.

“Demand in China and other emerging economies has surged above pre-crisis levels, while many advanced countries demand has yet to fully recover to these levels,” it said, pointing out that about half of the world’s steel output growth in 2010 occurred in Asia. It referred to the steel market outlook for 2011 and 2012 as ‘moderately good.’ But it also warned that the projected demand increases could be threatened if prices for steel raw materials continue to rise.

Governments and the industry will have to “explore policy means to ensure secure, predictable and accessibly supply of steel raw materials for all steel producers,” it said. For China, the ‘moderate’ demand growth rate of 5% expected for this year and in 2012 marks a “turning point away from the high growth rates experienced during the last decade.

“Construction is the largest market for steel and continues to be the weakest of all the demand sectors, especially in advanced economies.” In China, construction growth should slow as government stimulus ends and efforts are made to reduce energy use.”

Steel production has almost recovered to the pre-earthquake level in Japan, with no major obstacles in steel supply, it said. The impact on the Japanese industry is considered ‘smaller than originally feared’, and “over the longer term, reconstruction work is expected to generate additional demand for steel.”