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European demand for steel set to recover albeit at a slower pace

Over the past decade the strongest growth in demand for steel has been witnessed in China, according to ArcelorMittal’s chief economist, who was speaking at the 33rd Coaltrans World Coal Conference in Berlin.

Julian Steer said that even through the crisis, China has managed to grow its steel demand at an annual rate of around 8 per cent. In emerging markets outside of China, growth has also been relatively robust given the declines seen during 2009. Average annual growth in these regions stands around 3 per cent per annum and Mr Steer predicts similar growth rates for 2013.

“As steel demand growth is associated with growing populations and rising steel intensity due to urbanisation and industrialisation - it’s no surprise that over the past decade the strongest growth has been seen in China, followed by other developing markets,” he told delegates at the conference.

It has been the developed markets, however, where demand has struggled to return to levels witnessed before the financial crisis struck. Last year demand was 20 per cent below its pre-crisis peak, while in beleaguered Europe it had slumped by over 30 per cent.
But there is light at the end of the tunnel, according to the the World Steel Association (WSA), which expects a rebound over the next few years in the developed markets. Mr Steer is also confident about the USA and “cautiously optimistic” on Europe. 

“In Europe they [the WSA] also see growth over the next 5 years but at a slower pace and will still be below pre-crisis levels in 2025. My personal view is that it’s right to be cautious as demand will continue to be restrained by stubbornly high unemployment and continued need to deleverage by consumers and governments alike,” he said.

“However I am slightly more optimistic as slowly the competitiveness issues of Southern Europe are being alleviated, particularly in Greece, Ireland, Portugal and Spain.”

As for China, the WSA expects continued growth up to around 2020, then for steel demand to decline.  While Mr Steer also expects demand to peak around 2020, he is “slightly more optimistic” over the peak level of demand.
This content is provided by Coaltrans Conferences for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.

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