Commodities | Jan 09 2008
By Chris Shaw
While concerns rise over the possibility of the US economy entering recession and some commentators such as Dennis Gartman suggest it is already in a recession, the outlook for the global economy remains solid at least if forecast steel consumption growth grows as anticipated.
Steel industry consultant MEPS forecasts world steel demand to hit more than 1,450 million tonnes in 2011, which is up more than 320 million tonnes from the 2006 level of 1,134 million tonnes.
Early figures indicate consumption in 2007 rose 7.1% from the 2006 level to 1,215 million tonnes, with MEPS expecting a further 21% increase over the next four years, even allowing for a slowing in the rate of increase towards the end of the decade.
As has been the case in most commodity markets in recent years the group expects Asia to lead the way in terms of stronger demand, with more than 65% of the extra demand between 2006 and 2011 to come from the region driven by a 40% increase in China.
Other emerging regions such as South America and the former USSR are also expected to enjoy strong growth or more than 20%, while demand in Africa and the Middle East is expected to rise by as much as 50%.
Growth in the Oceania region should be modest, as MEPS estimates an increase in demand from 8.0 million tonnes last year to 8.3 million by 2011.
The increased demand from emerging regions will offset modest growth among the more industrialised nations, MEPS pointing out the share of world consumption attributed to these regions (Western Europe and the NAFTA countries) has fallen from almost 50% in 2000 to around 33% now. On its forecasts the group expects this share to fall further to about 27% by 2011.