At the 50th annual meeting of worldsteel (World Steel Association) held in Dubai on October 10-11, the announcement of the association’s short-range outlook for global steel demand, made by T. V. Narendran, managing director of Indian steel producer Tata Steel and chairman of the worldsteel economics committee, was also attended by Dr. Edwin Basson, director general of worldsteel, John. J. Ferriola, chairman, president and CEO of US steelmaker Nucor Corporation and the new chairman of worldsteel, and by Dr. Wolfgang Eder, CEO of Austrian steel producer voestalpine AG and outgoing worldsteel chairman. All four discussed some of the issues facing the global steel industry and answered questions on various developments in the industry.
Regarding the current state of the global steel industry, Dr. Basson said that he was optimistic as the markets were not falling any further, while adding that the current situation is as good as we can expect at the moment. In answer to a question as to how long the current excess capacity situation will continue, Mr. Narendran recalled that overall global capacity is still 700 million metric tons more than what the industry is producing at present. The key fact at the current juncture, he stressed, is the current production is in line with demand. He further pointed out that even at the best of times for the steel industry global capacity usage is at around 82-83 percent. Basson commented in his turn that the capacity overhang globally will require interesting decisions to be made in the years ahead and also remarked on the significant impact on demand which small percentage shifts in consumption in China can have.
In response to a question on whether worldsteel’s predicted increases in global steel demand would lead to jobs growth, the new worldsteel chairman Ferriola said that it would certainly have an impact, though qualifying this by saying that efficiency requirements would limit the effect. On the same question, Mr. Narendran said that growth in steel consumption has a big impact down the line.
With the focus of the discussion turning to Latin America, Narendran remarked on the diverse performances of the different economies in the region, with Brazil forecast to see a 14.4 percent drop in steel demand in the current year, while Mexico and Chile are foreseen to record improvements in demand. Argentina and Venezuela are two other countries in the region expected to register declines in steel demand. As regards the situation in Brazil in the current year, Narendran said that the fall in prices in the residential sector and corruption investigations were contributing factors, while he added that with the anticipated end of political strife Brazil is expected to see an increase of 3.8 percent in steel demand in 2017. Referring to the general situation of economies across the world as affects steel, Dr. Basson said that it was not exactly that economies were going to grow, but that economies were going to contract at slower rates. Regarding Iran, he said that the country has a steelmaking tradition and could play an interesting role going forward, especially give regional characteristics. T.V. Narendran pointed out that the outlook for the Iranian economy has improved, though it will take time for the improved conditions to impact steel demand. Small growth in the country’s steel demand is predicted for 2016 and 2017.
As regards a possible free trade agreement between the EU and the US, John Ferriola of US-based Nucor said that a trade agreement based on the rules of trade would be good for both sides and so he would see it as a positive. On the European side, voestalpine’s Wolfgang Eder said that free trade is the only long-term solution for a peaceful future.