World steel demand growth seen slowing in 2011

World steel demand growth seen slowing in 2011

Tokyo: Growth in global steel demand is expected to slow to 5.3% in 2011 but to still hit a record 1.34 billion tonnes after jumping more than expected this year to above levels seen before the global economic crisis, the World Steel Association said.

China will make up 45% of global demand in 2011, while India will emerge as the world’s third-biggest steel consumer after China and the United States, the steel body predicted on Monday in a report issued at its annual conference in Tokyo.

“The industry landscape has been changing rapidly, particularly after the global financial crisis," said Hajime Bada, president of the world’s No.5 steelmaker, JFE Holdings Inc, who will chair the global body for the year starting after the conference ends on Wednesday.

“We are in a transitional period: emerging economies like China, India, Latin American countries and Russia are bolstering their shares in steel output and consumption while demand in developed economies remains in the doldrums," he told a news conference.

The steel group is expected to pick Xiangang Zhang, president of Anshan Iron & Steel Corp, as its chairman for the following year, which will be the first time its head has come from China.

China’s demand in 2011 will be 42% above the level in 2007, but demand in the developed world in 2011 is expected to be 25% below the 2007 level, Paolo Rocca, the body’s current chairman and also CEO of Techint Group, told a news conference.

While healthy long-term growth in demand is seen, the increasing volatility of iron ore and coal prices, key raw materials used in steelmaking, after the industry moved to a quarterly pricing system of the raw materials early this year is its biggest headache along with environmental issues.

“If you are in a construction project that takes several years to build you need to have some assurance about the price of materials that you are using," Ian Christmas, the association’s director general, told a news conference.

“There is no doubt a very short-term volatility in steel prices coming from raw material prices gives us and customers some issues," he said.

Demand for steel is set to rise 13.1% to 1.27 billion tonne this year, higher than an earlier forecast of 8.4% growth.

Stronger-than-expected demand in Europe and other developed economies due to restocking and government stimulus packages in addition to continued robust demand in emerging economies prompted the upgrade, the association said.

But the withdrawal of government economic stimulus measures and volatile exchange rates cloud the outlook.

Growth in China’s steel demand in 2011 is expected to slow to 3.5% from an estimated 6.7% in 2010 due to government efforts to cool the real estate sector and ongoing steel production control, the steel body said.

Demand in India will rise 13.6% in 2011 to 68 million tonnes, about one-tenth of China’s estimated 599 million tonnes.