Speaking recently at the 69th Organization for Economic Co-operation and Development (OECD) Steel Committee, committee chairman Risaburo Nezu said that there are clear indications that the world steel industry is emerging from the worst slowdown since more than half a century although the overall situation remains fluid and challenging.
Mr. Nezu pointed out that production and demand from end-user industries like automotive, construction and consumer goods as well as trade improved in 2010 after the drastic fall of 2008-2009.
He said that global steel demand during the third quarter of 2010 reached an annualized rate of 1.4 billion mt, six percent higher than the pre-recession level seen during the second quarter of 2008. Production amounted to about 1,046 million mt during the first nine months of 2010, up by almost 20 percent compared to the same period in 2009.
Nezu indicated that Asian countries, particularly India and China, emerged rather quickly from the recession due to infrastructure-oriented stimulus packages and strong internal demand, whereas the effect of the crisis was more adverse on the European and the NAFTA steel industry and as a result these economies took longer to recover. Steel demand in Asia is currently 17.6 percent higher than pre-recession levels, he said, adding that, in particular, Chinese demand is about one-third above the pre-recession level.
Regarding the market outlook, Mr. Nezu commented, "Prospects for economic activity in general and steel demand in particular remain uncertain, even in the short term. Global economic recovery continues, with quarterly growth in the OECD expected to increase only gradually in 2011 and 2012 after weakening again in the second half of 2010. Growth in large emerging economies will most likely stay strong in 2011 and 2012, close to 10 percent per year in China, and above eight percent in India. However, downside risks to the global economy remain substantial with fragile financial markets, ongoing household balance sheet deleveraging, sovereign debt problems and tensions in foreign exchange markets."
Global steel demand is expected to rise by 5.3 percent in 2011 according to the World Steel Association.
The OECD Steel Committee chairman stressed that steel capacities increased during the past decade by 814 million mt resulting in a world capacity close to an estimated 1.89 billion mt in 2010, of which over 300 million mt were in excess, endangering the economic soundness of the industry.
The global upturn in steel production has resulted in a significant tightening in the markets for steelmaking raw materials, sending prices of some key materials to historically high levels, Nezu indicated.