World Steel Association: Steel Growth Disappoints in 2013, Slow Growth Expected through 2014-15

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Defying all forecasts, the world steel market never came close to recovery in the past year, according to the World Steel Association Outlook for 2014-15. Apparent global steel use will increase 3.1% to 1.53 billion tons in 2014, following growth of 3.6% in 2013. The forecast for 2015 shows steel growth at 3.3%, reaching 1.58 billion tons.

"In 2013, world steel demand grew higher than our previous forecasts due to a stronger-than-expected performance in the developed world in the second half of the year," said Hans Jurgen Kerkhoff, chairman of the World Steel Economic Committee. "In particular, the recovery in the U.S. gained strength. In addition, the downturn in the EU bottomed out, and we now expect the steel demand in the eurozone will move into positive growth in 2014.

"On the other hand, many emerging economies continue to struggle with structural issues and financial market volatility. This, along with China's deceleration, is the reason for our slightly lower growth rate forecast for 2014. In 2015, growth in most parts of the world will accelerate, thanks to a continuing steady recovery in developed economies and an improvement in emerging economies. But China's steel demand will further decelerate, and this will prevent the broad recovery momentum from registering a higher global growth rate for 2015."

Unexpected, unstable political situations in many emerging economies and developments in Crimea create a downside risk for the WSA's outlook for the Commonwealth of Independent States (CIS). Finally, issues surrounding China's debt and real estate bubble remain a problem, Kerkhoff said.

After growth of 6.1% in 2013, with support from the government's infrastructure investment, apparent steel use in China is expected to slow to 3% growth in 2014 to 721.2 million tons as the government's efforts to rebalance the economy continue to restrain investment activities. In 2015, steel demand growth is expected to further decelerate to 2.7%.

In India, steel demand is expected to grow 3.3% to 76.2 million tons in 2014, following 1.8% growth in 2013, due to an improved outlook for the construction and manufacturing sectors, even though this will be constrained by high inflation and structural problems. Despite uncertainties relating to the current national elections, steel demand is projected to grow by 2015, supported by the expectation that structural reforms will be implemented.

In Japan, "Abenomics" saw a moderate increase in gross domestic product (GDP), with a 2% increase in steel demand. Apparent steel use is expected to contract 1% to 64.6 million tons in 2014, due to the consumption tax hike negatively affecting the construction and automotive sectors. In 2015, steel demand is expected to increase 0.5%.

In the U.S, after a decrease of 0.6% in apparent steel use in 2013, a return to growth and recovery is forecast for 2014-15. In the 28-member EU, after a 0.2% contraction of apparent steel use, it is expected to grow 3.1% in 2014 to 143.3 million tons with help of the construction sector, which is gradually bottoming out.

The Middle East-North Africa (MENA) region is the brightest prospect, with expected growth of 6.1% to 66.7 million tons in 2014, after a 0.9% increase in 2013. In 2015, steel demand in the region is expected to grow 9.4%. Growth in the region is strengthening as political uncertainties moderate, plus strengthening in the non-oil sector in the Gulf Cooperation Council (GCC) region.

The WSA represents approximately 170 steel producers, about 85% of global steel production.

For related information, see January 17, 2014, article - World Enters 2014 with 542 Million Tons of Excess Steel Production Capacity.

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