The trade group representing the global steel industry released a short-term outlook that predicts steel consumption will increase by 3.6% to a total of 1.42 million metric tons this year, with a further 4.5% to 1.49 million metric tons in 2013. The World Steel Association (WorldSteel) also reported that global steel consumption in 2011 increased by 5.6% over the previous year, to total 1.37 million metric tons.
WorldSteel forecasts that by the end of 2013 steel consumption in the developed world will be 14% below the 2007 (pre-recession) level, though in emerging and developing economies it will be 45% higher. By 2013, emerging and developing economies will account for 73% of global steel demand, in contrast to 61% in 2007.
Hans Juergen Kerkhoff, chairman of the WorldSteel Economics Committee, stated: "Despite the market weakening in the fourth quarter of 2011, world steel demand achieved solid growth of 5.6% in 2011 due to the recovery momentum seen in the first half of the year. Though we saw a series of negative events in 2011 (including Japan's earthquake, political turmoil in MENA [Middle East/North Africa], and flooding in Thailand), their impact proved to be contained mostly locally.
“The exception was the Euro-zone debt crisis,” Kerkhoff continued, “which did have global impact and is the main cause behind the deterioration in this new forecast from our previous one issued in October 2011. Signs of stability are now emerging and we expect the recovery to resume in the second half of this year, leading to a higher growth forecast for 2013.”
Noting that European debt had not had a notable global effect so far, the economist said economic uncertainties continue to exist as result of insolvency in several of the continent’s largest national economies, and he pointed to this as the significant “downside risk” to the steel industry’s outlook.
“High oil prices and geopolitical tensions in the oil-producing regions are also important downside risk factors,” Kerkhoff said. “The possibility of a hard landing for the Chinese economy cannot be ignored but at this point we do not attach high probability to this. It should be noted that the most important development in our revised forecast is the continuing slowdown of Chinese steel demand driven by the Chinese government's efforts to restructure the economy. However, part of China's projected slower growth is offset by improvement in other emerging markets and the strengthening recovery of the US."
China emerged as the world’s largest steel producer over the past decade, and now represents the largest independent factor in the industry’s roster. WorldSteel expects China’s apparent steel use to increase by 4.0% to 648.8 million metric tons in 2012, following growth of 6.2% in 2011.
In 2013, WorldSteel predicts Chinese steel demand will grow again by 4.0% as the nation’s economy enters a less steel-intensive phase, as the government strives to “rebalance” the economy and address the overinflated real-estate market. WorldSteel projects China's steel consumption in 2013 will be 674.8 million metric tons — 61% higher than in 2007.
Indian steel consumption will grow 6.9% in 2012 to 72.5 million metric tons. In 2013, the forecast sees steel consumption in that country rising by 9.4% on infrastructure and urbanization development.
In the U.S., steel consumption is seen growing 5.7% in 2012 and 5.6% in 2013, to 99.5 million metric tons. For NAFTA as a whole, WorldSteel sees apparent steel use growing by 5.2% in 2012 and 5.1% in 2013.
In Central and South America, steel consumption should grow by 6.8% to 49.1 million metric tons in 2012, an historic high. In 2013, the region's steel consumption should grow another 6.7% to 52.5 million metric tons.
The European Union’s steel consumption will decline -1.2% to 150.9 million metric tons in 2012, according to WorldSteel, but it should recover to grow by 3.3% 2013. Total steel consumption in the E.U will be 155.8 million metric tons in 2013, according to the group.
Japanese steel consumption will decline by -0.6% this year to total 63.7 million metric tons, and in 2013 steel consumption in Japan is forecast to continue to decline by -2.2% to 62.3 million metric tons.
In the C.I.S., WorldSteel sees steel consumption growing 4.1% in 2012 and 5.1% in 2013, to 59.1 million metric tons by the end of that period.
Steel consumption in the MENA region is expected to rebound by 5.7% in 2012, following a -2.0% drop in 2011. The growth of steel consumption in the region is forecast at 8.4% in 2013, to a total of 68.5 million metric tons.