Global steel consumption growth to slow in 2012

JOHANNESBURG (miningweekly.com)  – The World Steel Association (worldsteel) is forecasting global steel consumption growth to slow to 3.6% in 2012, from 5.6% in 2011, as China enters a less steel-intensive growth phase and eurozone debt crisis uncertainties continue to persist.

Steel consumption is expected to reach 1.42-billion tons this year, the association said. It is forecasting steel demand growth of 4.5% to 1.49-billion tons for 2013.

Economics committee chairperson Hans Juergen Kerkhoff said that despite the market weakening in the fourth quarter of 2011, world steel demand achieved solid growth in 2011, owing 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 the Middle East and North Africa (MENA) and flooding in Thailand), their impact proved to be contained mostly locally.

“The exception was the eurozone debt crisis that did have a 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,” he explained.

However, despite the global impact of the eurozone debt crisis having been limited so far, uncertainties continued to exist and this remained the key downside risk to worldsteel’s current outlook.

China’s apparent steel use in 2012 was expected to increase by 4% to 648.8-million tons following 6.2% growth in 2011. In 2013, steel demand would grow again by 4%, as the economy enters a less steel-intensive growth phase with the government’s efforts to rebalance the economy and contain the real estate bubble. This projection brought China’s apparent steel use in 2013 to 674.8-million tons, 61% higher than the 2007 level.

India is expected to resume its high growth trend. In 2012, the country’s steel use is forecast to grow by 6.9% to reach 72.5-million tons. In 2013, the growth rate is forecast to accelerate to 9.4% on the back of urbanisation and surging infrastructure investment.

In the US apparent steel use is projected to grow by a 5.7% in 2012 and by 5.6% to 99.5-million tons in 2013, bringing it to 92% of the 2007 level.

For the North American Free Trade Agreement, apparent steel use would grow by 5.2% and 5.1% in 2012 and 2013 respectively.

In Central and South America, apparent steel use was forecast to grow by 6.8% in 2012 to reach a historical high of 49.1-million tons with Brazil returning to positive growth of over 5%. In 2013, the region’s steel use is anticipated to grow by 6.7% to reach 52.5-million tons, 28% higher than the 2007 level.

However, worldsteel stated that the recovery in steel demand was expected to stall in most of the EU in 2012, as the sovereign debt problems continued to act as a major drag on economic activities in the area, with some differentiated pictures across the regions.

Overall, apparent steel use in the European Union (EU) was estimated to drop by 1.2% to 150.9-million tons in 2012, but show a modest recovery of 3.3% in 2013. These projections would bring steel demand in the EU to 155.8-million tons in 2013, only 79% of the 2007 level.

Further, Japan’s steel use was expected to decline by 0.6% to 63.7-million tons in 2012 owing to the impact of exchange rate appreciation, despite the reconstruction efforts following the March 2011 earthquake. In 2013, apparent steel use in Japan was forecast to continue to decline by 2.2% to 62.3-million tons, which was 77% of 2007 levels.

In the Commonwealth of Independent States steel consumption would grow by 4.1% in 2012 and then by 5.1% in 2013. These projections would bring the region’s apparent steel use in 2013 to a record 59.1-million tons.

Meanwhile, steel demand in the MENA region was expected to rebound by 5.7% in 2012, following a 2% drop in 2011 brought on by political turmoil. The growth of steel use would accelerate further to 8.4% in 2013 bringing the region’s steel use to 68.5-million tons in 2013, also a record and 26% more than the 2007 level.

Worldsteel said its forecast suggested that by 2013, steel use in the developed world would still be at 14% below the 2007 level, whereas in the emerging and developing economies, it would be 45% above. In 2013, the emerging and developing economies would account for 73% of world steel demand in contrast to 61% in 2007.