Australia will see the biggest percentage increase in steel output next year among major steel-producing countries, as the global economy’s tentative recovery boosts output by more than expected.
Unlike this year when China has been the driver, with a near 19% forecast rise in output (much better than the forecast 5% fall), 2010 will see higher demand and production from the US, Europe and Japan, as well as a 5% rise in China (or 26 million tonnes).
That means higher imports of iron ore from countries such as Australia and is good news for the likes of BHP Billiton, Rio Tinto, Macarthur Coal, Fortescue Metals and the host of smaller groups in iron ore and steel.
The World Steel Association, which accounts for 85% of all global steel output, now says this year will see apparent steel use down 8.6% instead of the 14.0% slump in the April forecast. And 2010 will see a 9.2% rise in projected steel, instead of a marginal increase.
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The second short-term steel use forecast from the World Steel Association, released late yesterday, shows that Australia will see a 34% jump in apparent steel consumption next year, helped by the rebounding in demand and a full year’s output from BlueScope Steel’s huge No.5 blast furnace at Port Kembla.
That was returned for a new campaign last month after the company spent well over $300 million on a reline and upgrade of the associated sintering plant. As a result the country’s steel output will rise from this year’s expected 5.10 million tonnes, to 6.843 million in 2010. That will still be below the 7.615 million tonnes produced in 2008.
In April, the group had forecast that global apparent consumption — which does not make any adjustments for possible changes in stock levels — would fall 14.9% this year, which would have been the biggest fall since the Second World War.
In that April forecast, apparent consumption in 2009 was expected to be slightly above one billion tonnes down from the nearly 1.2 billion tonnes produced in 2008. Now output of crude steel is forecast to hit 1.103 billion tonnes this year and 1.205 billion next year.
“The global recovery is stronger than we predicted in April. According to our current forecast, China will rebound 19% in 2009 and 5% in 2010,” Daniel Novegil, chairman of the World Steel Economics committee, said in a statement.
The recession slashed global steel demand deeply this year, cutting into earnings for industry leaders such as ArcelorMittal, Posco, the Japanese industry and other producers (But not India). But Chinese production has boomed as the country spent heavily on infrastructure such as new railroads, bridges and roads.
China’s apparent steel use is expected to be up 18.9% this year. That will see it account for 47.7% of all global steel use. Without that rise, the fall in global apparent steel use would have been of the order of 24%, instead of the 8.6% drop now being forecast.
“Emerging economies will slow down 17% in 2009 but grow 12% in 2010,” the WSA forecast.
“Apparent steel use in developed economies that contracted 34% in 2009 will rebound 15% in next year. In April, the association saw especially big falls in output in the US (about 36% and Europe (30%). Now that will be partly reversed next year. The WSA said therefore that global steel demand will return to growth in 2010,” the statement said.
The WSA said Asia-Pacific apparent steel use was forecast to grow 7.6% next year. Indonesia will experience the slowest growth with a 5% rise.
The WSA sees India’s steel use growing by about 12% next year; Australia’s rebounding solidly by 34% and Japan’s up by 16%.
The figures show that apparent steel use in Australia’s biggest markets outside China for iron ore and/or coking coal; Japan, South Korea, Taiwan and India, is forecast to rise by 24 million tonnes next year. With China’s 26 million tonne increase, that means our biggest markets will be looking to buy more ore and coal next year.