Emerging Countries Lead World Steel Growth, Mr. Bada

World Steel Association’s chairman Hajime Bada said world steel demand regained sustainable growth path when the demand growth accelerates in Southeast Asia, India, Middle and Central America and Russia while Chinese economy shifts to stable growth. World steel demand was pushed by Chinese rapid growth while the demand was less than 800 million tonnes for more than 30 years through late 1990s. He expects another demand growth led by the emerging countries.

World apparent steel consumption reached 1.283 billion tonnes in 2010 topping 2007 record while the consumption decreased to 1.206 billion tonnes in 2008 and 1.134 billion tonnes in 2009 after continuous growth through 2007. Mr. Bada said worldsteel expects the consumption increases by 5.9% to 1.359 billion tonnes in 2011 from 2010 and by 6% to 1.441 billion tonnes in 2012 from 2011. He said the demand increases by 6.2% in 2011 and by 6.9% in 2012 in emerging countries while the demand growth in developed countries slows from 5.1% in 2011 to 3.8% in 2012.

Raw steel output in 64 countries increased by 7.3% to 630 million tonnes in January-May from same period of 2010. The output increased by 8.5% to 290 million tonnes in China and by 18.4% to 28 million tonnes in South Korea while Japanese output decreased by 0.1% to 45 million tonnes. Mr. Bada expects Asian steel supply will be balanced in long term despite of the temporarily oversupply when Asian apparent steel consumption will increase by 5-6% or annual 40-50 million tonnes. He expects Chinese government shuts down old inefficient steel making capacity while China has only few major expansion projects including Baosteel’s Zhanjiang project and Wuhan Steel’s Fangchenggang project. He expects Chinese supply balance improves through consolidation into major makers and scrap of old facility. He expects major expansion will finish after Hyundai Steel’s No.3 blast furnace while Asian integrated steel projects delay in Thailand, India and other Asian countries.

Raw materials issue is getting severe. Mr. Bada said quarterly pricing of raw materials reduced steel makers’ margin when steel makers cannot pass the higher cost on the selling price timely. He said worldsteel cannot intervene in the issue despite of the huge issue. The position is different in the member companies of worldsteel when some makers have equity in iron ore and coal and electric furnace steel makers focus on ferrous scrap market while other integrated steel makers suffered from higher iron ore and coal price.