World steel demand set to fall most since WW2

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Post Date: 29 Apr 2009    Viewed: 785

World Steel Association (Worldsteel), whose members produce around 85 percent of the world's steel, expects the apparent steel demand to fall by 14.9 percent to 1.019 billion tonnes this year, compared with 1.197 billion tonnes last year.

Apparent steel use reflects the deliveries of steel to the marketplace from domestic steel producers as well as importers. This differs from real steel use, which takes into account steel delivered or drawn from industry inventories.

The association, said it expected demand to stabilize in the latter part of 2009, leading to a recovery in 2010, without providing an exact forecast for next year.

"The recovery is coming," Ian Christmas, director general at Worldsteel, told a news briefing in London, as the industry body released its short-range outlook.

"But it's going to be slow and the timing on how quickly things will improve is still uncertain.

"It's going to be quite some time before we go back to the star years of 2007, 2008," he said, referring to past years when steel output and demand hit record highs.

The forecasts of Worldsteel are prepared by the association's research team and approved by its board of directors, which is headed by Lakshmi Mittal, the chairman of ArcelorMittal, the world's top steelmaker.

Christmas said the picture is less severe in emerging countries such as India, Brazil and China, while developed nations are hit much harder.

Steel demand in China, the world's biggest producer and consumer, is seen falling five percent as the ongoing global economic crisis hits the country's exports. The decline in China's demand is the first since 1995, the association said.

World steel demand excluding China, was seen falling 20.4 percent to 614.2 million tonnes this year, while excluding the BRIC countries -- Brazil, India, Russia and China -- it was seen down 22.3 percent at 512.7 million.

India is one of the few countries that the association projected to buck the trend, predicting 2 percent growth in steel demand for the Asian nation this year.

Figures confirmed Christmas's view of the picture worsening in developed nations. Demand for the metal, used in construction and automotive industries, is seen down 36.6 percent in the United States and 28.8 percent in the European Union.

 

MOVING ON?

Global recession has knocked down steel demand in key consuming industries, such as building and vehicle manufacturing, forcing steelmakers to reduce production sharply, shelve investment plans and lay off workers.

Banks have grown reluctant to lend money to the $800 billion industry, where credit facilities are crucial for the continuation of operations.

But Christmas said things seemed to be improving on that front.

"We hear that it is a question of confidence now. It was a case of lack of credit, and now in one or two countries that is not the case anymore, which suggests we're moving on from the real credit crunch."

Also, the association believes combined efforts by the world's top governments and central banks will start to support consumption.

"Improvement in steel consumption for the second half of 2009 will depend on the effects of government stimulation packages, continuous stablilization of financial systems and the return of some consumer confidence," Daniel Novegil, chairman of the World Steel Economics committee, said in a statement.