Despite a slowing Chinese economy, the amount of steel used around the world is set to grow by around 45 million tonnes this year and around 52 million tonnes in 2014 amid still respectable levels of manufacturing and construction activity in developing nations and a recovering home building sector in the US, the latest forecasts say.
Releasing its latest short range outlook, the World Steel Association (worldsteel) says overall ‘apparent steel use’ throughout the world is set to grow by 3.1 per cent from 1.430 million tonnes (Mt) in 2012 to 1.475 MT this year and by a further 3.3 per cent next year to 1.523 MT.
Driving the growth will be China, which accounts for almost half of all worldwide consumption, where economic rebalancing efforts mean usage growth rates in 2014 will be nowhere near expected levels of six per cent this year but will still come in at a respectable three per cent or 21 Mt.
Elsewhere, structural reforms in India will see usage growth of 5.6 per cent there, while Brazil, Russia and the MENA region are expected to see growth rates of 3.8 per cent, 4.6 per cent and 7.3 per cent respectively.
The US, meanwhile, is expected to see respectable growth of three per cent aided by improving automotive, energy and residential construction sectors whilst modest growth is expected to return to the European Union after usage volumes there have fallen by 9.5 per cent and 3.8 per cent over the last two years.
worldsteel Economics Committee chair Hans Jüregen says lower than expected usage rates in 2013 were driven by a more severe than expected correction in the Eurozone and weaker than expected economic growth in India and Brazil. Whilst steel use growth in China is expected is register six per cent in 2013, that in the rest of the world is expected to come in at just 0.7 per cent.
But he says risks to the overall outlook are receding.
"In 2014, we expect to see continued recovery in global steel demand with the developed economies overall returning to positive growth,” Jüregen said in a statement. “At the same time we expect slower growth in China. With risks within the developed world receding there is some uncertainty emerging from developing countries due to unresolved structural issues, political instability and volatile financial markets."
“[But] All in all, despite economic conditions for the global steel industry remaining uncertain and challenging, we are forecasting further growth for steel demand in 2014.”
The latest news comes as the market for steel around the world appears to be stabilising following several years of deterioration. In September, average composite prices (all products) edged up by just under two per cent last month to come in at $US 703 million – albeit with prices remaining almost a quarter below their levels in early 2011.
UK-based steel information provider MEPS cautioned about potential downward pricing pressure in the US and climbing inventory levels in China and with other recent worldsteel data showing the world consuming only just over three quarters (75.4 per cent) of the steel it has the capacity to produce.
The latest forecasts represent modestly good news for steel makers in Australia, who have slashed capacity and incurred massive write-downs in recent years amid low levels of domestic demand, falling prices and - until recently - a higher Australian dollar.
For the construction industry, any upward pressure on prices caused by higher demand would add to input costs, although the effect would more than likely be relatively mild.