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China's steel use to go down 5%: World Steel Association

(Xinhua)
Updated: 2009-04-28 11:13

China's apparent steel use, predicted to see a five percent decline in 2009, will lead the recovery for the whole world with a total steel use decline of 14.9 percent, the World Steel Association said in London on Monday.

The World Steel Association (worldsteel), which represents 180 steel producers, national and regional steel industry, forecasted that worldwide apparent steel use is expected to decline by 14.9 percent to 1,018.6 million metric tons (mmt) in 2009 after declining by 1.4 percent to 1,197 mmt in 2008.

However, steel demand is expected to stabilize in the latter part of 2009 leading to a mild recovery in 2010.

Related readings:  Steel prices ease on slow inventory rundown  Expert: China's steel exports may contract 80%  Steel sector poised for rebound after Q4 losses  China steel imports hit 7-yr low in Dec.

China is expected to witness a negative growth of minus five percent in the apparent steel use in 2009 as the ongoing global economic crisis hits China's exports, in addition to the effects of a slowing domestic economy, Worldsteel said.

The last time China's apparent steel use recorded a negative growth was in 1995 when the apparent steel use fell by 17.2 percent following the real estate bubble burst.

"China's stimulus policy which put more emphasis on infrastructure development will give a boost to its steel industry, while more mature economies are still trying to stabilize its bank industry," said Ian Christmas, director general for the World Steel Association.

Emerging economies are being affected by the economic crisis, but to a lesser degree, Christmas said.

India, whose economy focuses more on software and textile, is projected to have a positive growth of two percent for the apparent steel use in 2009, while BRIC countries as a whole are forecasted to contract by only minus 5.9 percent, according to the Worldsteel prediction.

While the projected apparent steel use for the world, excluding BRIC, is down 22.3 percent in 2009, the world excluding China is expected to decline by 20.4 percent in 2009.

Within the NAFTA (North American Free Trade Agreement) region, the US is expected to show the largest decline in steel demand in the post-war period. In 2009, the apparent steel use is expected to fall by 36.6 percent.

Europe will be the most affected region outside NAFTA. The EU will have a 27 percent decline. Other part of Europe and CIS regions are expected to show a decline of more than 25 percent in their apparent steel use in 2009.

Japan has also been affected by a sharp decline in the exports of its steel-using industries, especially automotive and machinery. The apparent steel use is expected to fall by 20.4 percent in 2009.

"The progression of the U.S. financial crisis into a global economic crisis brought about a massive and regionally synchronized global decline of steel demand in late 2008. For most of the world this trend has continued into the first quarter of 2009," said Daniel Novegil, chairman of the Worldsteel Economics Committee.

Improvement in steel consumption for the second half of 2009 will depend on the effects of government stimulation packages, the continued stabilization of financial systems and a return of some consumer confidence," Novegil said.

The Board will review a Short Range Outlook for 2010 at its Board Meeting in October 2009 in Beijing.