Global steel demand expected to grow in 2010

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29 Nov 2009

Industry association the World Steel Association (WSA) forecasts that apparent steel use will contract globally by –8,6%, to 1,104-million tons, in 2009, after declining by –1,4% in 2008, while global steel demand in 2010 is forecast to grow by 9,2%, to 1,206-million tons. The improvement is largely owing to the exceptionally strong growth in steel demand in China. WSA economics committee chairperson Daniel Novegil says that the global recovery is stronger than the decrease of –14,1% predicted in April.
“According to our current forecast, China will rebound 19% in 2009, and 5% in 2010. Emerging economies will slow down 17% in 2009, to grow to 12% in 2010. Apparent steel use in developed economies, which contracted by 34% in 2009, will rebound by 15% in 2010. Therefore, the WSA forecasts growth for global steel in 2010,” he says.
However, Novegil adds that the growth is expected to be moderate. The emerging economies, especially China, will be the critical factor in driving world steel demand in the near future, as was the case before the financial crisis.
“While the state of the global economy has improved, uncertainties and concerns regarding the resilience of the recovery still remain with the possibility of premature reduction in government stimulus actions. This uncertainty particularly exists for the Chinese economy in 2010, whose fast recovery in 2009 was largely enabled by such strong government sti- mulus policies,” he asserts.
China’s apparent steel use in 2009 is expected to increase by 18,8% to reach 526-million tons. China is expected to account for 47,7% of world steel apparent use and, exclu- ding China, potential world steel demand would have fallen by –24,4%.
India also remained relatively resilient to the global crisis and apparent steel use is expected to grow by 8,9% and 12,1%, in 2009 and 2010 respectively.
Novegil notes that the North American Free Trade Agree- ment (Nafta) region is expected to show a –35,8% decline in apparent steel use in 2009, and a positive 17,1% growth in 2010. Apparent steel demand in the US is likely to fall by –38,7%, to 60-million tons, in 2009 after falling by –8,2% in 2008. It should recover to 72- million tons in 2010 with a growth rate of 18,8%.
The European Union member countries (EU27) economies have also been significantly affected by the economic crisis and the region’s apparent steel use is expected to fall by –32,6% in 2009 to 122-million tons. In 2010, the apparent steel use in the EU27 is expected to grow by 12,4%.
“For both the Nafta region and the EU27 region, the level of apparent steel use that is expected in 2010 amounts to what was achieved back in 1991, demonstrating the severity of the impact of the crisis on the steel industry,” says Novegil.
He adds that Japan will see its apparent steel use decline by –31,3%, which is expected to recover by 15,8%, in 2010, to reach 61-million tons. Apparent steel use in the Commonwealth of Independent States is expected to contract by –30,8%, in 2009, and should grow by only 8,2% in 2010.
Local Steel Industry
South Africa was ranked 21 out of 43 by the WSA in terms of global crude steel production in 2008, and is also Africa’s largest steel producer, accounting for 48% of total crude steel production on the continent in the same year.
The primary steel industry is a significant contributor to the South African economy and earns considerable amounts of foreign exchange.
Production
The South African Iron and Steel Institute (Saisi) reports that total South African crude steel production amounted to an estimated 8,176-million tons in 2008, a decline of 9% when compared with the 8,986-million tons produced in 2007, repre- senting about 0,6% of world production. Of this, about 5,5-million tons is consumed domestically.
Carbon steel deliveries by the country’s primary steel industry amounted to an estimated 6,535-million in 2008, a decline of 10,6% when compared with figures for 2007. A total of 5,415-million tons was sold on the local market, representing an increase of 1,7% on the preceding year’s production. Exports amounted to 1,12-million tons, a decrease of 43,6% on the 2007 figure. A total of 1,27-million tons of ferrous scrap was exported in 2008, while 0,086-million tons was imported.
Consumption
Saisi reports that the biggest local consumer of steel products is the manufacturing sector, which consumed 2 529 873 t of the total production for the first nine months of 2008. Within the manufacturing sector, the structural steel subsector accounted for 904 920 t, from January to September 2008, compared with 1 138 192 t for 2007. The cables, wire products and gates subsector is also a significant component of the manufacturing sector from a steel products consumption point of view, accounting for 599 473 t during the first three quarters of 2008, while the automotive subsector consumed 257 829 t during the nine-month period.
The second-biggest consumer is the building and construction sector, which accounted for 1 220 352 t during the nine-month period. The mining sector is another significant consumer of steel products, with its consumption increasing from 146 396 t, in 2004, to 164 132 t, in 2005, and 211 121 t, in 2006, to 235 783 t, in 2007. Consumption for the first nine months of 2008 came in at 197 717 t. The increase in steel consumption over the last few years can be attributed to the significant capital investment that has taken place in the sector.
Given the delay or suspension of mining projects, necessitated by the current global economic slowdown, it is expected that the mining sector’s steel demand in 2009 will reduce. In fact, several manufacturing subsectors will be affected by the economic squeeze. Steele use for the automotive subsector, for instance, is expected to decline in 2009.
Trade
South Africa is a net exporter of steel products, with the rest of Africa accounting for 37% of total exports in 2008, reports Saisi. Other significant export markets are the Far East and the EU27, each of which accounted for 22%, in 2008, as well as South America with 5%, the Middle East accounting for 6% and the Nafta countries and African island nations with 4% each.
One-half of the carbon, alloy and stainless steel products imported into South Africa in 2008 emanated from the Far East, with the EU27 accounting for 43%, the Middle East 3% and the Nafta member countries 2%. Eastern Europe, the former Soviet Union and the rest of Africa accounted for 1% each.
Employment statistics for 2008 have not been made available, but Saisi reports that, at the end of 2007, its member companies employed 16 482 people permanently. They also employed 16 438 contractors.

Source: Engineering News