More good news for Australia with world steel demand for 2010 expected to be much stronger than previous thought.
The World Steel Association has almost halved its estimate for the fall in 2009 apparent steel demand; it has sharply boosted its 2010 forecast.
The Association (known also as the WSA) believes apparent global steel use will rebound by 9.2% next year, recovering after this year’s 8.6% fall, which was almost half the 14.9% drop forecast last April.
This is good news for the likes of BHP Billiton, Rio Tinto, Macarthur Coal, Fortescue Metals and the host of smaller groups in iron ore and steel.
(Apparent steel use reflects deliveries of steel to the marketplace from domestic producers as well as from importers. This differs from actual steel use, which takes into account steel delivered to or drawn from inventories.).
The improvement in 2009 has been driven by the surge in Chinese output, up 15% in the June quarter and more since. China will make up 47.7% of global steel consumption this year, according to the WSA figures.
Next year China will be solid, but higher demand will come from other big economies, such as the US, Europe and Japan. Production will rise as a result.
China will see an 18.8% jump in apparent consumption to 526 million tonnes this year (the actual rate ran at more than 550 million tonnes in June through August).
The WSA had previously forecast a 5% fall for China this year.
In April, the group had forecast that global apparent consumption — which does not make any adjustments for possible changes in stock levels — would fall 14.1% this year.
That would have been the biggest fall since the Second World War.
Total world production and consumption in 2009 was expected to be slightly above 1 billion tonnes down from the nearly 1.2 billion tonnes produced in 2008.
And for 2010 the WSA saw steel demand climbing only marginally.
"The global recovery is stronger than we predicted in April.
"According to our current forecast, China will rebound 19 percent in 2009 and 5 percent in 2010," Daniel Novegil, chairman of the World Steel Economics committee, said in a statement.
Global demand will rise 9.2% to 1.206 billion tonnes next year from 1.104 billion tonnes, the group said in its first forecast for 2010.
The recession slashed global steel demand deeply this year, cutting into earnings for industry leaders such as ArcelorMittal, but Chinese production has boomed as the country spent heavily on infrastructure such as new railroads, bridges and roads.
"Emerging economies will slow down 17 percent in 2009 but grow 12 percent in 2010.
"Apparent steel use in developed economies that contracted 34% in 2009 will rebound 15% in next year (but will still be far short of 2008 levels).
"In April the Association saw especially big falls in output in the US (around 36% and Europe (30%). Now that will be partly reversed next year.
"The WSA said therefore that global steel demand will return to growth in 2010," the statement said.
World crude steel output in August was 10.6.5 million tonnes in the 66 countries reporting to the WSA (around 85% of total global capacity).
That was down just 5.5% from August 2008 and continues the steady rebound since April (when the gloomy forecast was given).
That’s much better than the 20%-30% falls year on year recorded in earlier months this year.
The WSA said that August saw almost all the major steel-producing countries (including China, Japan, South Korea, Germany, the US and Brazil) have shown their highest monthly figures so far this year.
Total crude steel production in the 66 reporting countries for the first eight months of 2009 was 759.5 million tonnes, down 18.1% over the same period of 2008.
That is half the rate in March-April.
Dow Jones quoted Lakshmi Mittal, chairman and chief executive of global steel giant ArcelorMittal (MT) and outgoing chairman of the World Steel Association, as saying that he was surprised by the forecast for a 5% rise in Chinese output in 2010.
He pointed out that was much lower than the 8%-9% economic growth expected in china in 2010.
But based on the WSA forecast for this year for China of crude steel production of 526 million, the 2010 forecast will be around 26 million tonnes higher still.
With worries growing of aggressive exporting by Chinese mills, with duties and dumping investigations underway in the US and several other countries, there are fears that the extra steel next year will end up in offshore markets, not used within China.
The WSA said Asia-Pacific apparent steel use was forecast to grow 7.6% next year. Indonesia will experience the slowest growth with a 5% rise.
The WSA sees India’s steel demand growing by around 12% next year; Australia’s rebounding solidly by 34% and Japan’s up by 16%.
That big rise for Australia will be the highest in the WSA.
