Worldsteel Cuts Global Steel Demand Forecast for 2012, 2013

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Researched by Industrial Info Resources (Sugar Land, Texas)--The World Steel Association (Worldsteel), which represents 68 of the biggest steel companies, has cut its forecast for global steel demand due to the ongoing crisis in the Euro zone and cooling Chinese economy. The association reduced its 2012 growth forecast to 2.1% and 1.3 billion tons in demand from a 3.6% growth forecast in April, and cut the 2013 outlook to 3.2% growth from the previous forecast of 4.5%. Global steel use grew 6.2% in 2011.

"The economic situation deteriorated during the second quarter of this year due to continued uncertainty arising from the debt crisis in the Euro zone and a sharper-than-expected slowdown in China," said Hans Juergen Kerkhoff, chairman of the Worldsteel Economics Committee. "Momentum in both the developed and emerging parts of the world weakened considerably."

Steel consumption in China, the world's largest producer and consumer of steel, will grow less than previously expected in 2012 and 2013, to 639.5 million tons and 659.2 million tons, respectively. China has experienced a worse-than-expected slowdown in demand this year after more than a decade of steep consumption growth, exacerbating the industry's outlook.

Steel demand in the 27-member European Union (EU) is forecast to decline by 5.6% in 2012, with steel use in Spain and Italy seen contracting by 11.9% and 12.6%, respectively, the association said. Spain and Italy are among the countries worst hit by the sovereign debt crisis.

In Germany, the biggest of Europe's economies, steel use will likely fall by 4.7%. Demand in the EU area will recover next year, rising an estimated 2.4%, said the association, whose members produce about 85% of the world's steel.

India's demand for steel is projected to grow 5.5% to 73.6 million tons in 2012 and 5% in 2013, the association said. That compares with a prior forecast of 6.9% and 9.4%, respectively. Japan's steel use is forecast to increase 2.2% to 65.5 million tons this year, aided by post-earthquake reconstruction.

Demand for steel from the North American Free Trade Agreement area, which is made up of the U.S., Canada and Mexico, is forecast to increase 7.5% to 130.4 million tons this year, driven by recovering automotive and construction industries.

Demand in developing economies, ranging from China and India, will grow by 3% this year and 3.7% next year. Steel demand in the developed world, from the U.S. to the Euro zone and Japan, will contract 0.3% this year and then grow 1.9% in 2013, the association said.

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