Apparent steel consumption will increase by 13.1% to 1272Mt in 2010 after contracting by -6.6% in 2009, according to a forecast issued by the World Steel Association (worldsteel). For 2011, it forecasts steel demand will grow by 5.3% to reach a record 1.340Mt.
The 2010 figure is a 13.1% increase on an earlier forecast made in April. The improved outlook is due to a better than expected forecast for the developed economies particularly EU, NAFTA, and CIS, as well as the continued strong rebound in most emerging economies. This suggests a steady and stable steel recovery, and the current forecast does not foresee a double dip economic recession as feared by some.”
Steel demand in the developed economies in 2011 will still be well below the pre-crisis peak level. The recovery so far has been mainly driven by the inventory cycle and government stimulus packages the effects of which are now fading out. Whether consumer and corporate spending will now pick up and continue the recovery momentum is yet to be seen. Recent economic indicators are sending mixed signals.
China’s apparent steel consumption in 2010 is expected to increase by 6.7% to 579Mt following a strong increase of 24.8% in 2009. While China showed an increase of 9.2% in apparent steel consumption during the period January to August in 2010, it is forecast that growth will slow considerably in the remaining part of this year due to the Chinese government’s effort to cool the real estate sector and ongoing steel production control. In 2011, the growth rate will further slow to 3.5% with a weak real estate sector and the phasing out of stimulus packages.
While the forecast for China is for a fairly low growth rate compared to other countries, its apparent steel consumption in 2011 will be 42% above the 2007 level. China will account for about 45% of world apparent steel consumption in 2011.
India’s steel demand grew 7.5% during the crisis and is expected to grow by 8.2% and 13.6% in 2010 and 2011, respectively. With 68Mt of apparent steel consumption in 2011, India will become the third largest steel using country in the world after China and the US. India’s apparent steel consumption will be 32% above its 2007 level.
In the NAFTA region, the US had a 36.2% reduction in apparent steel consumption in 2009. Aided by stock building activities and a recovery in manufacturing. Consumption is expected to grow by 32.9% in 2010 and then 9.4% to 86.1Mt in 2011, 20% down on the 2007 level. For NAFTA as a whole, apparent steel consumption will grow by 31.3% and 8.7% in 2010 and 2011 respectively.
In Central and South America, apparent steel consumption recorded a -23.6% fall in 2009, but the region’s steel demand is coming back strongly thanks to recovering commodity prices, exports and renewed capital inflows. The region’s apparent steel consumption will grow by 28.2% in 2010 aided by a strong rebound of 34.6% in Brazil. In 2011, the region’s apparent steel consumption will grow by 9.1% to reach 47.6Mt, a historical high for the region and 14% higher than the 2007 level.
The EU economies had a -35.7% reduction in their apparent steel consumption in 2009 with Spain, Italy, and the UK especially hard hit due to the collapse of their construction sectors. The recovery in the EU is turning out to be stronger than expected as the region’s manufacturing exports, especially Germany’s, gets a boost from the global recovery. In 2010, the region will see an increase of 18.9% in its apparent steel consumption on the back of inventory rebuilding and strength in the export sector. In 2011, increase in real consumption is expected to drive the region’s steel demand to grow by 5.7% to reach 147.4Mt, bringing it back to 75% of the 2007 peak.
Japan, which experienced a fall of -32.3% in apparent steel consumption in 2009, will see consumption increasing by 19.1% in 2010, much higher than expected, due to the fiscal stimuli and strong export growth. But in 2011, its steel demand is expected to retreat by -1.4% due to tight fiscal policy, a strong Yen, and weakening of its major steel using sectors. This brings Japan’s apparent steel consumption in 2011 to 62.0Mt, 76% of 2007 level.
The recovery in the CIS region is surprisingly robust. Apparent steel consumption in the region fell -28.3% in 2009 with a fall of -43.0% in Ukraine. In 2010, apparent steel consumption in the region is expected to grow by 26.5% and then by 11.1% in 2011. This brings the region’s apparent steel consumption in 2011 to 89% of the 2007 peak.
Turkey, which experienced a -16% decline in 2009, will see a strong recovery of 20.5% in 2010, followed by a further 10.7% growth in 2011 to reach 24.1Mt, which will bring its apparent steel consumption back to the 2007 peak level.
The MENA region was stable in 2009 despite the fall in oil prices and collapse in the construction market which was offset by an expansionary fiscal stance in the GCC countries, Egypt, and Iran. The region recorded an 0.4% growth in 2009 and is expected to show a 5.9% and a 5.3% growth in apparent steel consumption in 2010 and 2011 respectively. This will bring apparent steel consumption in the MENA region to 65.7Mt, which is 17% above the 2007 level.