Global Steel Consumption Growth in 2012…It’s going to be Slower than Projected

It should come as no surprise to anyone working in the fabricated steel industry, but – the rate of growth for actual steel usage and consumption is going to be lower in 2012 than originally anticipated.

In fact, according to The World Steel Association (world steel), global steel consumption growth will slow to an extremely modest – and somewhat disappointing – 3.6% in 2012. That’s a significant drop from the growth rate in 2011 which was a much healthier and more robust 5.6%.

Total steel consumption for the year – for all countries – is projected to reach only 1.42 billion tons. Fortunately, there is some good news in the long range forecast. That’s because, steel consumption in 2013 is expected to increase to 1.49 billion tons … a growth rate of 4.5%

So … there may be little reason for doom and gloom … at least beyond this year. As global economies improve in 2013, it appears likely that the demand for steel will grow, as well.

The question now, however, is as follows: what is causing the “slow growth” for steel consumption this year … in 2012? In truth, there are lots of reasons. Consider …

In a recent speech, Hans Juergen Kerkhoff, the economic committee chairperson for The World Steel Association, enumerated the many events in 2011 that have impacted steel consumption and usage growth in 2012.

According to Mr. Kerkhoff, earthquakes in Japan, turmoil in the Middle East and floods in Thailand – all of which occurred in 2011 – have had some impact on steel usage in 2012. This is true even though the global steel market realized “solid growth” in the 4^th quarter of 2011 … growth which came about as a result of strong recovery momentum which took place in the first half of the year. And yet:

The solid growth experienced by the steel industry in the 4^th quarter of 2011 has not been enough to overcome the real problem behind the reduced demand for steel this year.

That problem is, of course, the European Debt Crisis. Countries throughout Europe, saddled with debt, are using much less steel than in previous years and that has dramatically slowed growth in 2012. Importantly, that impact is likely to last throughout the year

As is often the case, however, all of the news is not bleak. Chinese steel consumption in 2012 is expected to increase by about 4% 648.8 million tons. Steel consumption will increase in India and the United States, as well.

And as for Australia, current forecasts are for a growth rate in steel consumption of 4.1% in 2012 … 5.1% in 2013.

That’s good news. It means that in China, in India, in the United States and in Australia, the steel industry – and the local economies it supports – will remain vital and healthy this year … and into the future. 

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