Domestic demand to increase 13.3 per cent, according to WSA data.
The global steel demand this year is expected to increase 5.9 per cent, according to the data made available by the World Steel Association (WSA). India, with an expected growth in steel demand of 13.3 per cent, will lead the steel demand in the world.
The association, whose members produce 85 per cent of the total steel made in the world, in its newsletter about the ‘short range outlook’ on steel in 2011 and 2012, said, “India is expected to show strong growth in steel use in the coming years due to its strong domestic economy, massive infrastructure needs and expansion of industrial production.” It further says that in 2012, India’s steel demand will touch 14.3 per cent, reaching 79 million tonnes (mt) per year.
In 2010, India produced 67 mt steel and is the fifth-largest steelmaker in the world with China as the leader, followed by Japan, US and Russia.
Daniel Novegil, chairman of the World Steel Economics Committee said, “2010 saw a steady recovery of steel demand which began in the second half of 2009 driven by stimulus packages globally, the resilience of emerging economies and an overall market recovery. In 2011, we expect to see a further 5.9 per cent growth in world steel demand.”
The growth in the Western world is expected to be led by the US. The country will see a 13 per cent growth in 2011, at 90.5 mt. Apparent steel use in the EU is forecast to grow by 4.9 per cent to 151.8 mt in 2011 on the back of an export-driven industrial rebound. WSA said, “The largest economy eurozone countries like Germany and France are forecast to enjoy solid recovery in steel use mainly in the automotive and machine building sectors. Other economies (Greece, Ireland, Portugal and Spain) are projected to show slow growth in steel use particularly as a result of weak construction activity.”
China, on the other hand, the world leader in steel consumption, is expected to grow by five per cent in 2011, at 605 million tonnes and is expected to grow by the same percentage in 2012, reaching 635 million tonnes. The association, however, noted, “Given the pace of steel production in the first quarter of 2011, the Chinese apparent steel use could be even higher. However, it is expected that the Chinese government’s efforts to cool down the overheating economy, particularly the real estate sector, will impact Chinese steel demand somewhat later this year.” In Central and South America, one of the leading markets for steel, the apparent use is forecast to grow by 6.6 per cent in 2011 to 48.8 mt. In 2012, the region’s apparent steel use is forecast to grow by 8.3 per cent to 52.8 mt.
The forecast, however, has not been revised yet due to the difficulty of assessing the impact of the earthquake and tsunami in Japan. “The impact of the earthquake and tsunami points to a significant downward adjustment in steel use for 2011 and upward adjustment for 2012,” WSA said.
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It is clear from the data that the steel demand will continue to be driven by the growing economies, led by India. Even as the consumption is growing in the western world, WSA predicts that by 2012, steel use in the developed world will still be at 14 per cent below the 2007 level whereas in the emerging and developing economies, it will be 38 per cent above.
In 2012, the emerging and developing economies will account for 72 per cent of world steel demand in contrast to 61 per cent in 2007, WSA noted.
Being amongst the top five steel makers in the world, leading from the front in steel demand growth may be heartening for the country grappling with issues that are derailing the setting-up of newer steel mills. An analyst with a domestic brokerage said, “Steel demand in India is bound to grow because of the infrastructure development. The question is how much of this demand growth will be met by the local steel mills and how much will be met by imports?”
An official from one of the leading steelmakers in India, said, “We have been a net importer of steel but this year due to the commissioning of capacities in the range of 8-10 million tonnes, we might become a net exporter. However, as there aren’t any significant capacity additions expected in 2012, the 14 per cent demand growth is expected to be met by imports again.”
Out of the top steel makers in the country, JSW Steel is expected to commission its 3 million tonnes blast furnace in a couple of months and Tata Steel, too, will add 3 million tonnes by September 2011 giving a major thrust to the steel production in the country.
State-owned Steel Authority of India, too, is ramping up production to reach 24 million tonnes from a shade under 14 million tonnes, currently. The capacity will come in phases over the next few years.