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News

SOLID GROWTH IN GLOBAL STEEL CONSUMPTION IS FORECAST OVER THE NEXT FIVE YEARS

MEPS (International) : 18 February, 2003  (New Product)
World finished steel consumption is forecast to rise from 808 million tonnes in 2002 to 894 million tonnes in 2007 - an increase of 10.5 percent over the period.
World finished steel consumption is forecast to rise from 808 million tonnes in 2002 to 894 million tonnes in 2007 - an increase of 10.5 percent over the period. The early years of the twenty first century have set the pattern for the future. Asia's share went up from 41.4 percent at the start of the millennium to in excess of 47 percent last year. These proportions are expected to continue for the next five years. Consumption will advance in all regions in the medium term. However, the growth in the industrialised nations will be at a slower pace than the average across the world. The developing and emerging countries will show the fastest rate of steel demand in the future.

Apparent Consumption of Finished Steel - World
(Million tonnes)
1999 2000 2001 2002 2003 2004 2005 2006 2007

EU-15 136.9 144.3 138.3 137.8 137.8 140.5 146.8 152.3 150.6
Other Europe 31.8 35.7 32.3 32.6 32.6 33.0 33.9 35.7 36.6
Former USSR 28.4 35.9 36.8 41.0 42.7 44.0 45.3 46.6 47.0
NAFTA 149.5 158.1 138.0 141.0 139.6 144.1 149.5 155.0 153.2
South America 22.8 27.5 26.3 25.7 26.1 27.0 28.8 29.7 30.6
Africa 15.5 15.0 18.0 18.6 18.9 19.4 20.3 20.7 20.7
Middle East 17.2 19.9 22.8 23.5 24.4 25.3 26.2 27.1 28.0
PR China 119.0 119.9 152.7 185.7 192.0 198.2 202.7 205.4 210.7
Japan 64.7 73.8 68.7 65.7 66.0 66.9 68.7 69.6 69.6
Rest of Asia 109.1 118.6 118.9 129.4 131.2 134.2 135.7 138.0 139.0
Oceania 6.7 6.8 7.3 7.5 7.7 7.7 7.9 8.1 8.1

Total World 701.6 755.5 760.1 808.5 819.0 840.3 865.8 888.2 894.1

Source: MEPS.
Totals may not be arithmetically correct because of rounding.

We are forecasting an increase in apparent consumption of just 9.2 per cent in the European Union over the five years to 2007. This is lower than the ten year average growth pattern to 2002. This conservative estimate is based on our expectations of zero expansion in steel demand in 2003. Little improvement was seen in 2002 in the Rest of Europe as several East European economies adjusted to cuts in government spending prior to joining the European Union. We forecast finished steel consumption in 2007 at 36.6 million tonnes - up 4 million tonnes (12.5 per cent) on the figure recorded in 2002. Steel consumption has been mounting in recent years in the former USSR after the crisis of the mid 1990's. Industrial activity has built up - based on oil revenues and part privatisation in Russia. The rate of growth over the next five years may not be as rapid as in the previous five.

NAFTA steel consumption growth through the 1990's was approaching 4 percent per annum. We forecast modest demand growth of 8.6 percent in the region over the five years to 2007. We believe that it will take time for the manufacturing and construction sectors to recover from the bubble economy of the 1990's. Steel consumption has slipped in South America over the past two years due mainly to economic difficulties caused by political uncertainty. These problems are easing but could return in the future. Nevertheless, we are forecasting a 19 percent rise in apparent consumption over the next half a decade. The basis of this optimism is the prospect of this region developing into a manufacturing base for some international organisations.

Demand for steel has grown quite significantly in Africa since the start of the millennium. North Africa has been the main area for development - mainly in infrastructure. We forecast a steady rise in finished steel consumption over the next five years. Most of the improvement will come from the northern countries and South Africa. Steel demand in the Middle East has been rising rapidly since 1998 - expanding by 7 million tonnes over the period. We forecast a more measured improvement up to 2007. Oil revenues will assist in the development of the region into the future - based mainly on infrastructure investment.

Chinese steel consumption jumped by 85 million tonnes (85 percent) in the period 1997 to 2002. The increase was more than 30 million tonnes last year alone. We forecast significant growth in the future but not at the rapid pace of recent years. Our estimate for finished steel consumption in 2007 is 210.7 million tonnes - up 25 million tonnes over the period. We believe that government spending will have to be reduced in the near term. This will stifle expansion in the economy and restrict growth . A degree of destocking is also anticipated. Steel demand in Japan has steadily declined in recent years due to the restriction of government spending on construction projects and weak consumer demand . Modest growth is anticipated in the manufacturing and building sectors as the economic performance improves. We expect apparent consumption of finished steel to rise just 4 million tonnes between 2002 and 2007. We are not forecasting a major recovery in the near term because much of the country's manufacturing sector is being moved offshore - mainly the China. In the rest of Asia, further growth in consumption is anticipated up to 2007. Demand from the three main consuming countries, India, South Korea and Taiwan has been moving forward steadily in recent years. We forecast a continuation of the improving tendency but at a figure more reminiscent of the ten year growth rate, not the gains made since 1998. The steel consumption advances in Oceania made over the past five years are likely to continue to 2007.
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