Hans Jürgen Kerkhoff
Chairman, worldsteel Economics Committee

Global apparent steel use will increase by 2 per cent to 1,562 million tonnes in 2014, slowing from growth of 3.8 per cent in 2013, according to the short range outlook for 2014 and 2015 released by World Steel Association (worldsteel) on October 6. For 2015, it has forecast that world steel demand will grow by another 2 per cent to reach 1,594 million tonnes. The forecast rates are downward revisions from 3.1 per cent for 2014 and 3.3 per cent given in last April’s SRO.

Hans Jürgen Kerkhoff, Chairman, worldsteel Economics Committee, has said: “The positive momentum in global steel demand seen in the second half of 2013 abated in 2014 with weaker than expected performance in the emerging and developing economies. As a consequence we are issuing a lower steel demand growth figure than our forecast released in April this year. The slowdown in China’s steel demand reflecting the structural transformation of the economy has contributed significantly to our lower global growth projection. We have also seen major slowdown in South America and the CIS countries due to falling commodity prices, structural constraints and geopolitical tensions. In contrast, the developed economies fared well this year. Recoveries in the EU, United States and Japan are expected to be stronger than previously thought, but not strong enough to offset the slowdown in the emerging economies. In 2015, we expect steel demand growth in developed economies to moderate, while we project growth in the emerging and developing economies to pick up.”

This outlook is prone to risks coming from various fronts. The US interest rates increase expected in 2015 is likely to impact global capital flows creating instability in the vulnerable emerging markets. At the same time the outlook in emerging markets is constrained both by the need for structural reforms and geopolitical tensions and as a result energy prices, globally, have emerged as a new risk factor. In China, the rebalancing and transition towards a consumption-driven economy is not without challenges and uncertainties. Lastly, the recovery in the Euro-Area is still constrained by household and government deleveraging.”

Apparent steel use in China is expected to slow to 1 per cent growth in 2014 to 748.3 million tonnes with rapid cooling of the real estate sector as the government’s efforts to rebalance the economy curtails investment and weakens business sentiment. The weak growth momentum will continue into 2015 and China’s apparent steel use will grow by 0.8 per cent to reach 754.3 million tonnes in 2015.

India’s outlook is improving following the election of a new government which is promising pro-business reforms. In 2014, the country’s steel demand is expected to grow by 3.4 per cent to 76.2 million tonnes in 2014, speeding from 1.8 per cent in 2013. In 2015, structural reforms and improving confidence will support a further 6 per cent growth in steel demand. Elevated inflation and fiscal consolidation remain key downside risks to the outlook. Both projection rates are better than those in April’s SRO.

In Japan, following a 2.1 per cent increase in apparent steel use in 2013, steel demand in 2014 is revised upward to increase by a further 2.3 per cent to 66.8 million tonnes. However, as the positive impact of ‘Abenomics’ fades away and with another expected consumption tax hike steel demand is expected to decline by 1.5 per cent in 2015.

In USA, after a decrease of 0.4 per cent in apparent steel use in 2013, steel demand is seen increasing by 6.7 per cent to 102.2 Mt in 2014, a large upward revision, helped by strong growth in the automotive and energy sectors. Steel demand is expected to increase by 1.9 per cent in 2015.

In Brazil, apparent steel use will contract by 4.1 per cent in 2014 and will rebound only by 1.5 per cent in 2015. Problems such as high inflation, overvalued currency, high labour costs and infrastructure bottlenecks are curtailing investment activities in the country.

The recovery in the EU has gained further momentum in 2014 and steel demand outlook has improved considerably to grow by 4 per cent to 145.9 million tonnes after increasing by 0.8 per cent in 2013. The improvement reflects a pickup in steel using sectors in most countries, but notably the UK and Poland and those countries that underwent structural reforms. Apparent steel use in 2015 is projected to grow by 2.9 per cent. Apparent steel use in Germany is expected to show 3.2 per cent growth in 2014 and 2.3 per cent in 2015.

The outlook for apparent steel use in CIS expects 3.8 per cent decline in 2014, against 2.8 per cent growth in 2013 due to the crisis in Ukraine. In 2015, assuming a stabilisation of the political situation, CIS steel demand will grow by 1.9 per cent.

The World Steel Association (worldsteel) represents approximately 170 steel producers (including nine of the world’s 10 largest steel companies), national and regional steel industry associations, and steel research institutes. Worldsteel members represent around 85 per cent of world steel production.

The Short Range Outlook is provided by the worldsteel Committee on Economic Studies which meets twice a year. The committee membership consists of chief economists from more than 40 of the worldsteel member companies. The committee considers country and regional demand estimates to compile a global overview on apparent steel use (ASU).

The projections forecasts by worldsteel consider both real and apparent steel use. Apparent steel use reflects the deliveries of steel to the marketplace from the domestic steel producers as well as from importers. This differs from real steel use, which takes into account steel delivered to or drawn from inventories.

  Million Tonnes Growth (%)
  2013 2014 (f) 2015 (f) 2013 2014 (f) 2015 (f)
European Union (28) 140 146 150 0.8 4 2.9
Other Europe 37 38 39 8.2 1.9 3.8
CIS 59 57 58 2.8 -3.8 1.9
NAFTA 130 138 141 -2.4 6.4 2.2
Central and South America 49 48 50 4.2 -2.4 3.4
Africa 34 35 37 10.8 2.8 8
Middle East 50 52 55 0.2 2.3 6
Asia and Oceania 1,032 1,050 1,064 4.9 1.7 1.4
World 1,531 1,562 1,594 3.8 2 2
Of which,
Developed Economies 388 405 411 -0.2 4.3 1.7
Emerging and Developing Economies 1,143 1,157 1,182 5.2 1.2 2.2
China 741 748 754 6.1 1 0.8
India 73.7 76.2 80.8 1.8 3.4 6
Note: ASU for India for 2015 is estimated by us factoring steel use growth rate given by SRO.

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