Chinese steel demand puts floor under 2009 decline

The Brussels-based World Steel Association is forecasting that apparent steel use will have shrunk worldwide by 8.6 percent, to 1,104 million metric tons, by the end of 2009, after declining 1.4 percent during 2008.

However dismal, this is an improvement over the forecast World Steel issued last April, which predicted a 14.1 percent falloff in apparent steel use worldwide during 2009. The better numbers are due to very strong growth in Chinese steel demand, thanks to the government’s economic stimulus plan. China’s apparent steel use in 2009 is expected to finish up at about 526 mmt, roughly 47.7 percent of global steel use, according to World Steel.

Now that a recovery appears to be underway, the association predicts that global steel demand will grow 9.2 percent during 2010, or to 1,206 million mt, regaining 2008 levels.

Daniel Novegil, chairman of the World Steel Economics Committee, said that he expects emerging economies, especially China, to be the critical factor in driving world steel demand in the near future. However, the recovery will be vulnerable to “premature” reductions in government stimulus plans.

World Steel expects the NAFTA region to show a 35.8 percent fall off in apparent steel use in 2009 and then 17.1 percent growth during 2010. In the U.S., apparent steel demand is likely to fall by 38.7 percent, to 60 million mt, in 2009. It should recover to 72 million mt during 2010, a growth rate of 18.8 percent.  

In the 27 EU economies, apparent steel use is expected to fall by 32.6 percent during 2009, to 122 mmt, and to rebound by 12.4 percent in 2010. For both the NAFTA region and the EU region, the level of apparent steel use is expected to equal 1991 levels, a graphic example of the severity of the crisis’ impact on the steel industry.  

“Apparent steel use” reflects deliveries of steel to the marketplace from domestic steel producers as well as from steel importers. This differs from “real” steel use, which takes into account steel delivered to or drawn from inventories. World Steel represents 180 steel producers, including 19 of the world’s 20 largest steel companies. Members produce about 85 percent of the world’s steel.

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