core sector communique

worldsteel Short Range Outlook

London, 18 April 2011 – The World Steel Association (worldsteel) today released its April 2011 short range outlook (SRO) for 2011 and 2012. worldsteel forecasts that apparent steel use will increase by 5.9% to 1,359 mmt in 2011, following 13.2% growth in 2010. In 2012, it is forecast that world steel demand will grow further by 6.0% to reach a new record of 1,441 mmt.

This forecast suggests that by 2012, steel use in the developed world will still be at 14% below the 2007 level whereas in the emerging and developing economies, it will be 38% above. In 2012, the emerging and developing economies will account for 72% of world steel demand in contrast to 61% in 2007.

The worldsteel Economics Committee met in Beijing in March 2011 to discuss the SRO, just before the natural disaster in Japan. The forecast has not been revised yet due to the difficulty of assessing the impact of the earthquake and tsunami.

Commenting, Daniel Novegil, Chairman of the worldsteel Economics Committee said, “2010 saw a steady recovery of steel demand which began in the second half of 2009 driven by stimulus packages globally, the resilience of emerging economies and an overall market recovery. In 2011, we expect to see a further 5.9% growth in world steel demand.

Our forecast is based on a stable and steady recovery of the world economy. There are however uncertainties deriving from financial fragilities in Europe, unrest in some oil producing countries in the Middle East and the earthquake in Japan, which could have a negative impact on the recovery and thereby affect steel demand. At our worldsteel board meeting last week the industry again expressed its condolences and support to its Japanese members.”

China’s apparent steel use in 2011 is expected to increase by 5.0% to 605 mmt following 5.1% growth in 2010. Given the pace of steel production in the first quarter of 2011, Chinese apparent steel use could be even higher. However, it is expected that the Chinese government’s efforts to cool down the overheating economy, particularly the real estate sector, will impact Chinese steel demandsomewhat later this year.In 2012, Chinese steel demand is expected to maintain 5.0% growth, which will bring China’s apparent steel use to 635 mmt.

Indiais expected to show strong growth in steel use in the coming years due to its strong domestic economy, massive infrastructure needs and expansion of industrial production. In 2011, India’s steel use is forecast to grow by 13.3% to reach 68.7 mmt. In 2012, the growth rate is forecast to accelerate further to 14.3%.

The rebound in apparent steel use in the US is forecast to continue with growth of 13.0% to 90.5 mmt in 2011, reflecting the second round of quantitative easing and new fiscal policy initiatives that gave a boost to economic activities and sentiments in industrial and energy markets. Construction markets remain at depressed levels. In 2012, steel use in the US is expected to grow by 6.9% to 96.7 mmt, bringing it back to 90% of the 2007 level. For NAFTA as a whole, apparent steel use will grow by 10.9% and 6.3% in 2011 and 2012 respectively.

In Central and South America, apparent steel use is forecast to grow by 6.6% in 2011 to 48.8 mmt. In 2012, the region’s apparent steel use is forecast to grow by 8.3% to 52.8 mmt, almost 30% higher than the 2007 level.

Apparent steel use in the EU is forecast to grow by 4.9% to 151.8 mmt in 2011 on the back of an export-driven industrial rebound. The largest economy eurozone countries like Germany and France are forecast to enjoy solid recovery in steel use mainly in the automotive and machine building sectors. Other economies (i.e., Greece, Ireland, Portugal and Spain) are projected to show slow growth in steel use particularly as a result of weak construction activity. In 2012, the region will see an increase of 3.7% to 157.5 mmt in its apparent steel use, bringing it back to 80% of the 2007 peak.

Japan’s steel use was expected to decline by -1.2% to 63 mmt in 2011 as stimulus measures expire. However, the forecast was prepared before the natural disaster and it is too early to fully grasp the implications of these recent tragic events. In 2012, apparent steel use in Japan was forecast to remain around 63 mmt, 78% of the 2007 level. The impact of the earthquake and tsunami points to a significant downward adjustment in steel use for 2011 and upward adjustment for 2012.

The recovery of steel use in the CIS has been surprisingly healthy due mainly to an unexpectedly strong rebound from steel-using sectors in Russia. As domestic demand and business investment continue to grow healthily in the region, apparent steel use is expected to grow by 7.5% to 52.1 mmt in 2011 and then by 8.9% to 56.7 mmt in 2012.

Steel demand in the MENA region is expected to remain stagnant in 2011, mainly due to downward revisions from North African countries. However, boosted by high oil prices, steel use in MENA is forecast to resume growth in 2012 at a rate of 7.9%. Given the political situation in the region, there are considerable uncertainties to the current forecasts.

Notes to Editors:

• The World Steel Association (worldsteel) is one of the largest and most dynamic industry associations in the world. worldsteel represents approximately 170 steel producers (including 19 of the world's 20 largest steel companies), national and regional steel industry associations, and steel research institutes. worldsteel members produce around 85% of the world's steel.
• The projections forecast by worldsteel consider both real and apparent steel use. Apparent steel use reflects the deliveries of steel to the marketplace from the domestic steel producers as well as from importers. This differs from real steel use, which takes into account steel delivered to or drawn from inventories.
• The Short Range Outlook is provided by the worldsteel Committee on Economic Studies which meets twice a year. The committee consists of chief economists from more than 40 worldsteel member companies. The committee considers country and regional demand estimates to compile a global overview on apparent steel use (ASU). The short range outlook is presented to the Board for their final review before publication.