At the OECD Steel Committee meeting held in Paris on 22-23 May 2008, industry and government officials reached a consensus that the world steel market will remain strong and that the global steelmaking capacity will increase from 1.560 billion mt to 1.849 billion mt in 2008 with a rise of 18.6 percent year on year.
Although signs indicate a global slowdown, demand for steel will continue to increase in countries like India, China, Brazil and Russia.
Commenting on this situation, current chairman of the OECD Steel Committee, Risaburo Nezu, said, "Global steel demand growth continues to be led by emerging economies, to meet the requirements of expanding industrial sectors and infrastructure growth. Demand growth in many mature economies has slowed in line with weaker economic activity. Global steelmaking capacity continues to increase rapidly. This could impact the market negatively if demand growth slows more than expected."
According to the data released by the OECD, in China apparent steel use increased by 13 percent in 2007 to 408 million mt. In India, apparent steel use increased 11.3 percent in 2007, reaching 51 million mt. In Russia, apparent steel consumption climbed to approximately 40 million mt in 2007. In the same year apparent steel consumption in Africa reached 25 million mt, while in the Middle East it rose to 44 million mt.
On the other hand, steel demand in Brazil increased by 18.6 percent. The Middle East and Africa registered strong growth in steel demand in order to meet the requirements of oil and gas project investments.
Moreover, global steelmaking capacity is soaring also with the support of high producer profitability and positive demand prospects. It is expected that the global steelmaking capacity will increase by 18.6 percent and will reach 1.849 billion mt in 2010. Asia will take the lead in this growth.
In addition, India, Vietnam and Thailand also have plans for expanding their steelmaking capacities. Middle East producers are planning to boost their steelmaking capacity in the long products segment. Iran is expected to be a major producer in the region with its plans to double its capacity.
Meanwhile, Latin American production capacity is also expecting to grow. Brazil in particular is expecting to expand its projects to meet the requirements of domestic demand and to produce semi-finished products for export.
The CIS is another region which will expand its production capacity. Russia is planning to expand its capacity by launching its mini mill projects and by renovating its existing facilities.
As regards raw materials, the market is expected to tighten. Supply difficulties are especially expected to be seen in the coking coal segment. On the other hand, there are many capacity expansion projects in Australia and Brazil.