The opening session at the SteelOrbis Fall '09 Conference and 61st IREPAS meeting featured the presentation of Kim Marti Subirana of CELSA, who said that, after a deep worldwide recession, the global economy is expanding again, pulled up by the strong performance of the Asian economies. Meanwhile, regarding the market outlook for 2010 in general, he said that the emerging and developing economies are generally further ahead on the road to recovery, whereas, in advanced economies, unprecedented public intervention has stabilized activity. However, despite these advances, the pace of recovery is expected to be slow: Advanced economies are projected to expand slowly through much of 2010, with annual growth of about 1.25 percent, and unemployment still rising. On the other hand, in emerging economies, real GDP growth is expected to reach almost five percent in 2010, with the rebound driven by China, and by a number of other emerging Asian economies.
Mr. Marti continued his presentation with some good news; Iraqi rebar consumption will be up to three million metric tons in 2011 compared to an estimated 1.5 million metric tons in 2009. The US Manufacturing index rose to 52.9 in August, signaling the first month of expansion after 18 consecutive months of contraction. Meanwhile, customer inventories in the US went down 3.5 percent. The latest assessment of composite leading indicators for OECD states indicate that clear signs of a recovery are visible in all seven major OECD economies as well as in China, India and Russia, Mr. Marti said, going on to quote the words of Dominique Strauss-Kahn of the IMF: "The world economy is expected to return to growth in the first half of 2010 with no risk of failure."
The CELSA official also remarked that the World Steel Association is forecasting that apparent steel use will contract worldwide by 8.6 percent to 1.104 billion mt in 2009, after declining by 1.4 percent in 2008. This is an improved figure over the spring forecast issued in April 2009, which predicted a decrease of 14.1 percent. However, this improvement is largely due to the exceptionally strong growth in steel demand in China. With signs from the beginning of the second half of 2009 of a worldwide recovery now apparent, global steel demand in 2010 is forecast to grow by 9.2 percent to 1.206 billion mt, which constitutes a recovery to the level of 2008.
Mr. Marti went on to give figures regarding current steel and long product consumption and indicated the distribution of rebar consumption per region over the years. Accordingly, East and Southeast Asia accounted for 60 percent of global rebar consumption in 2008 compared to 48 percent in 1992. Europe's share of global rebar consumption declined to nine percent from eighteen percent over the same period, with North America's consumption down to six percent in 2008 from nine percent in 1992. The CIS held a five percent share in 2008 compared to seven percent in 1992. The rest of the world held a twenty percent share of global rebar consumption in 2008.
Another interesting aspect of the presentation was the comparison between world per capita rebar consumption in 2008 and in 2003. China's per capita rebar consumption stood at 71 kg in 2008 up from 39 kg in 2003. South Korea was the leading per capita rebar consumer in 2008 with 234 kg, compared to 253 kg in 2003. Turkish per capita rebar consumption in 2008 was estimated at 99 kg, up from 56 kg in 2003.
Mr. Marti ended his presentation with his general outlook for the near future. He stated that inventories have been declining for more than a year now. As confidence returns, a rebuilding of stocks will start in general. The level of real demand will gain momentum as economies resume the path of growth. On the other hand, scrap price levels and other costs are still pushing mills either to increase prices or reduce production. Last but not least, bank rescue plans and reactivation packages are showing positive results. These measures will be left in place to ensure the global economy accelerates to healthy growth levels, which also helps to reinforce optimism as regards the future prospects of the markets.
In conclusion, as economies recover, rebar demand will slowly gain momentum and mills are still under cost pressure. This pressure keeps forcing production adjustments and so may push prices up in the near future.