STEEL GRIPS online - 2007 will be another strong year for the steel industry

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2007 will be another strong year for the steel industry

Oct 10, 2007

The International Iron and Steel Institute (IISI) forecasts 2007 will be another strong year for the steel industry with apparent steel use rising from 1,120.9 mmt in 2006 to 1,197.6 mmt in 2007, an increase of 6.8%. Latest projections for 2008 suggest a similar global growth rate to this year at 6.8%. These figures represent an upward percentage point revision of 0.9 for 2007 and 0.7 for 2008 over the March forecast.

The BRIC (Brazil, Russia, India and China) countries, which accounted for about 41% of global steel demand in 2006, will again be leading the growth with an expected increase of 12.8% for 2007 and 11.1% for 2008. Overall, 77% of world growth in 2007 and 71% in 2008 will take place in BRIC.

China apparent steel use is expected to grow by 11.4% in 2007 and 11.5% in 2008, accounting for 35% of the world total. For India, forecasts for apparent steel use point to an increase of 13.7% in 2007 and 11.8% in 2008.

Very positive developments are forecast for the Russian market, where growth of 25% for 2007 and 9.5% for 2008 are led mainly by the energy and construction sectors. Apparent steel use in Brazil is expected to increase by 15.7% for 2007 and 5.1% for 2008, with strong fixed capital formation partly driven by public investment programmes.

In the EU (27), the growth in steel demand supported by healthy developments in Germany is mitigated by adjustments in the inventory positions, leading to a growth of 4% in 2007 and 1.4% in 2008.

For 2007, steel demand in the NAFTA region appears less robust than previously anticipated, particularly in the residential construction sector. A negative contribution to growth also derives from inventory reductions. In 2008, improved prospects for the overall market conditions lead to positive forecasts of 4% growth.

The IISI Executive Committee reviewed the forecasts at its meeting in Berlin and commenting John Surma Chairman IISI said �Although global economic risks have increased, the IISI forecast assumes that the recent credit market volatility will not move the US economy into recession. We are pleased to note that North Africa, South Africa and the Middle East are emerging as strong growth regions as higher energy and raw material prices associated with growth in China, as well as other developing nations, increase income and boost investments in these regions."

Table 1: Short range outlook for apparent steel use (2006-2008) in '000 of tonnes

Regions	2006	2007	2008	% 05/06	% 06/07	% 07/08
EU-27	184.9	192.2	195.0	11.4	4.0	1.4
Other Europe	27.2	29.3	31.0	11.0	7.8	5.7
C.I.S.	50.0	59.8	65.2	18.1	19.5	8.9
N.A.F.T.A.	155.7	148.1	153.9	11.5	-4.9	4.0
Central and South America	35.6	39.5	41.6	11.8	10.9	5.2
Africa	23.1	25.1	27.5	11.4	8.9	9.5
Middle East	37.3	40.4	43.4	9.8	8.4	7.5
Asia (inc. Oceania)	607.2	663.2	721.1	6.2	9.2	8.7

Regions	2006	2007	2008	% 05/06	% 06/07	% 07/08
World	1,120.9	1,197.7	1,278.6	8.8	6.8	6.8
World (excluding China)	763.5	799.6	834.8	8.7	4.7	4.4
BRIC	457.8	516.6	573.9	9.8	12.8	11.1
World (excluding BRIC)	663.1	681.1	704.7	8.1	2.7	3.5