Global steel use to hit record in 2012 -Worldsteel

Mon Apr 18, 2011 2:50pm GMT

* Global demand will hit record 1.441 billion tonnes in 2012
* China will grow at 5 percent in 2011-2012
* Demand in developed world still below pre-crisis levels
By Silvia Antonioli

LONDON, April 18 (Reuters) - Overall global economic recovery will drive steel consumption to a record 1.441 billion tonnes next year, but austerity measures will slow growth in China, the World Steel Association said on Monday.

While demand in emerging countries in 2012 will be well above pre-crisis levels, steel consumption in developed economies will still lag behind the record levels hit in 2007-2008, Worldsteel data showed.

Steel demand in China, the world's top producer of steel, will grow at a 5 percent pace in the next two years to 605 million tonnes in 2011 and 635 million tonnes in 2012, according to the steelmakers association.

"China will be growing in steel terms but not at 10 percent, rather at 5-6 percent due to the austerity measures (undertaken by the government)," said the designated new Worldsteel director general, Edwin Basson, who will replace Ian Christmas from August.

"Our view is that there will be a significant slowdown in steel production in the second part of this year (in China)," he told reporters in London.

Daily output of crude steel in March 11-20 reached a record 1.945 million tonnes, figures from the China Iron and Steel Association showed last month.

Some other emerging countries may at times outpace Chinese production in percentage terms, but China will continue to grow, according to analyst Michelle Applebaum of Steel Market
Intelligence in Chicago.

"The Chinese are doing everything in their power to slow down inflation," Applebaum said.

"There will be a slight slowdown (in steel production growth) but China will continue to grow because what continues to drive Chinese growth is unstoppable."

In 2012, the emerging and developing economies will account for 72 percent of world steel demand, up from 61 percent in 2007, according to Worldsteel forecasts.

Steel demand in India, a fast growing steel producer, is forecast to grow by 13.3 percent this year and to accelerate to 14.3 percent in 2012.

The growth will be mainly driven by its strong domestic economy, massive infrastructure needs and expansion of industrial production, according to Worldsteel.

IN DEVELOPED MARKETS

In the United States, steel consumption will grow by 13 percent in 2011, reflecting a second round of quantitative easing, the association said.

The EU will grow at 4.9 percent this year and at 3.7 percent in 2012, affected by the construction sector crisis, Worldsteel forecast.

"The underperformance of the construction industry in southern Europe will be a feature for quite a number of years," Basson said.

The global forecast does not take into account potential losses caused by the earthquakes and tsunami that hit Japan, the world's second-largest steel producer, in March.

The steel capacity impacted in Japan could be about 7-10 million tonnes this year, looking at data and information available so far, Basson said.

"The lack of component exports from Japan is impacting the automotive industry around the world," Basson said. "In the automotive sector there will be some decline in steel consumption."

Japan however, will need large volumes of steel long products such as rebar for reconstruction soon, and it will probably import these products from China or Korea, Basson added.

Steel demand in the Middle East and North Africa will suffer the consequences of the political unrest that has shaken the region in the past few months, and steel demand growth in Africa
this year will be 3.1 percent lower than last year's level, according to Worldsteel.
(Editing by Jane Baird, sourced Thomson Reuters)