Demand for steel to rise by 6.2% in 2005

Demand for finished steel products in India in 2005 is expected to grow by 6.2 per cent and 6.40 per cent in 2006. According to a recent forecast by the International Iron and Steel Institute (IISI), the total demand in India will be 34.3 million tonnes in 2005 and 36.5 million tonnes in 2006.

The forecast also predicts India to hold the third position in the world for the next two years in terms of growth in demand for finished steel.

China is expected to be the front runner in 2005, with a growth in demand for finished steel at 10.6 per cent in 2005 and with total demand at 293 million tonnes.

However, Brazil, which is expected to grow at 9.8 per cent in 2005, will grow faster than China in 2006, with an estimated growth rate of 9.4 per cent.

Total demand for finished steel in Brazil will be 20.2 million tonnes in 2005 and 22.1 million tonnes in 2006, or a demand lower by 40 per cent to that in India.

Industry observers said that demand growth in the Indian steel sector is constrained by supply shortfall. This is despite the fact that most steel producers have expansion projects in the pipeline.

The government on the other hand has envisioned total production capacity of finished steel to be 110 million tonnes by 2020, against a current capacity of around 34 million tonnes.

IISI forecasts that the total use of finished steel products in 2005 will exceed one billion metric tonnes for the first time. Total world demand is forecast to grow by 3.7 per cent in 2005, an increase of 36 million metric tonnes (mmt) compared to 2004.

According to IISI forecasts China will account for 29 per cent of total steel demand and nearly 80 per cent of world growth in 2005. However, growth in the rest of the world will only be around one per cent or 8 mmt.

IISI expects apparent steel use will fall in several European countries and the USA in 2005. Slower economic growth, combined with an adjustment to steel stocks, will cause the temporary decline. In 2006, IISI forecasts the use of finished steel products will grow by 4.8 per cent and reach 1.05 billion metric tonnes.

A recovery in the world's economic activity will guarantee growth in steel demand in a wider range of countries. In addition to continuing growth of 9.2 per cent in China, the forecast is for growth rates of 9.4 per cent in Brazil, 6.2 per cent in the Middle East, and 6.4 per cent in India.