China's a Drag on World Steel Demand

The World Steel Association expects recoveries in the EU, United States and Japan to be stronger, but not enough to compensate for the slowdown in emerging economies.

Agence France-Presse

Oct. 6, 2014

2 min read

China steel worker — A worker cuts steel billets at an iron and steel enterprise in Ganyu County, China.

PARIS - Global demand for steel will grow by just 2% this year owing to a rebalancing of the Chinese economy and a slowdown in other emerging countries, the sector's trade body said on Monday.

The growth forecast to 1,562 million metric tons in steel use by the World Steel Association is down from the 3.1% rate it forecast in April and the 3.8% recorded in 2013.

"The positive momentum in global steel demand seen in the second half of 2013 abated in 2014 with weaker than expected performance in the emerging and developing economies," the head of the association's economics committee, Hans Juergen Kerhoff, said in a statement.

"The slowdown in China's steel demand reflecting the structural transformation of the economy has contributed significantly to our lower global growth projection," he added.

The WSA now expects just 1% growth in China's steel use this year to 748.3 million metric tons, and 0.8% growth in 2015.

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"In China rebalancing [of the economy] will continue to act as a drag on steel demand," said Kerhoff.

Falling commodity prices, structural constraints and geopolitical tensions also let to a "major slowdown" in South America and the CIS countries.

The WSA now expects recoveries in the EU, United States and Japan to be stronger, but not enough to compensate for the slowdown in emerging economies.

A drop of 0.4% in U.S. steel use last year is being followed by an upwardly revised 6.7% jump this year thanks to strong growth in the automotive and energy sectors, said the WSA. Growth is expected to continue at a rate of 1.9% next year.

After growing by 2.1% last year, demand growth is expected to accelerate to 2.3% this year in Japan to 66.8 million metric tons.

In the EU, demand growth is expected to jump from 0.8% last year to 4% this year to 145.9 million metric tons, then slow to 2.9% in 2015.

The WSA now expects steel use to rise by 4% in developed countries this year, then slow to 1.7% growth in 2015.

Emerging and developing economies, excluding China, are expected to see a 1.7% increase in demand this year which will then pick up to 4.7% in 2015.

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