Steel Consumption Forecasts Revised Up: The World Steel Association raised the 2011 global steel consumption forecast some 1.5% compared to the October 2010 forecast and released an initial 2012 global steel consumption forecast showing a further 6% growth rate as well. The WSA now forecasts global steel consumption to reach 1,359.2 million tonnes (mt) in 2011, up from the 1,339.7 mt estimated in October and some 13.2% higher than 2010 levels, while 2012 global steel consumption is forecast to rise some 6% to 1,440.6 mt. The WSA noted that the forecast was made prior to the Japanese earthquake which would likely lead to steel demand coming in below the 63 mt the association is estimating in 2011, while steel consumption will probably be higher than the 2012 forecast of 63 mt.
Europe, CIS and NAFTA Lead Increases in 2011: The higher consumption forecast for 2011 was driven by increasing estimates for various regions, including for the CIS (up 3.6%), NAFTA (up 3.6%), Europe (up 3.2%), Central and South America (up 2.5%) and Asia and Oceania (up 1.4%). Offsetting these increases were forecast cuts of 16.3% and 2.3%, respectively, for Africa and the Middle East due to the current political turmoil in those regions. China’s steel consumption was revised a nominal 1% higher as compared to October 2010. The steel consumption estimate for BRIC countries was revised up 1.2% in 2011, while ex-BRIC steel demand was revised 1.8% higher. Following the upward revisions, steel consumption in NAFTA is expected to grow 10.9% in 2011, followed by 7.5% growth in the CIS, 6.6% growth in Central and South America, 5.9% growth in Europe, and 5.5% growth in Asia and Oceania. Despite the downward revision, demand in the Middle East is still forecast to grow 2.6% in 2011, while steel consumption in Africa is expected to decline 3.1%. China is forecast to grow 5% in 2011. Growth of steel demand in BRIC countries is estimated at 5.7% in 2011, while Ex-BRIC countries are expected to grow at a 6.1% pace.
2012 Steel Consumption Up for All Regions: The WSA is forecasting all regions to see stronger steel demand in 2012, with Africa (up 9.1%), the CIS (up 8.9%) and Central and South America (up 8.3%) posting the largest gains. Demand in the Middle East is expected to rise 7.3% in 2012, followed by NAFTA (up 6.3%), Asia and Oceania (5.8%) and Europe (up 4.4%). China is forecast to grow another 5% in 2012, below the overall Asia and Oceania region, meaning that demand in that region will be driven by other countries - with some coming from India, which WSA expects to grow by 14.3% in 2012.
Developing Regions Outpacing Developed World: The WSA noted that steel consumption in the developed world will remain some 14% below peak 2007 levels in 2012, while demand from emerging and developing economies will be 38% higher than 2007 levels, boosting market share in that region to 72% in 2012 from 61% in 2007.
Outlook: We expect to see similar growth rates for steel consumption in both the developed and emerging market economies in 2011, although overall consumption levels in the developed markets will still remain well below pre-crisis levels. We also believe that WSA’s forecast for a 5.3% gain in 2011 is low given the 3.5% increase in Chinese steel consumption and would expect steel consumption to be more in-line with overall growth in the country’s GDP of 9%-10%.
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