Oct. 10, 2006 — The International Iron and Steel Institute (IISI) released the latest world steel consumption forecasts by the IISI Economics Committee during the group’s fortieth Annual Conference in Buenos Aires.

The committee forecasts that 2006 will be a strong year for the steel industry with a world growth rate in Apparent Steel Use rising 9%, from 1,029 million tonnes in 2005 to 1,121 million tonnes in 2006. Latest projections for 2007 suggest a more moderate forecast growth rate of 5%, from 1,121 million tonnes in 2006 to 1,179 million tonnes in 2007.

The projections forecast by the IISI Economics Committee consider both real and apparent steel use. Apparent steel use reflects steel delivered to the marketplace from steel producers as well as from importers. Inventory fluctuations may cause apparent steel use to differ from real steel use, or the amount of steel actually being used.

Reflecting on the current year, Asia, including China, has again dominated the world market for steel. With an increasing expenditure on infrastructure and construction in India, IISI forecasts the apparent steel use in India will grow 10% in 2006. However, by far the strongest growth in apparent steel use for 2006 comes from China, with a 14% increase. Shipbuilding has contributed to the turnaround in the Japan’s economy.

Steel use in the European Union for 2006 has been strong, with the construction and engineering industries leading the way. As one of the major economies in Europe, the strong recovery in Germany has contributed to the 8% growth in apparent steel use for the EU (25) economies. IISI estimates that this figure includes some addition to inventories as well as a rise in real steel use.

Growth in the tube and pipe sectors in Russia has contributed to the strong (7%) economic growth in the CIS region.

The NAFTA region has also exhibited strong growth with an 8% increase in steel use. However, the committee notes that higher interest rates and higher energy prices will begin to affect apparent steel use in this region later in 2006 and into 2007.

Strong demand for natural resources, including iron ore, has contributed to the strong growth in South America with an 11% increase in apparent steel use from 32 million tonnes in 2005 to a predicted figure of 36 million tonnes in 2006.

Outlook—Looking forward to 2007, the strongest growth region will again be China with an increase in steel use from 374 million tonnes in 2006 to 413 million tonnes in 2007. This figure, however, suggests a more moderate growth in the Chinese use of steel. Stronger credit control and administrative measures introduced by the Chinese authorities will cause apparent steel use to grow by 10.4% compared to 14.4% increase in 2006. Contrasting these figures with the rest of the world, IISI predicts a growth rate in apparent steel use for the whole world of 5.2% in 2007.

Medium Term Forecasts—The IISI Economic Committee has also developed medium term forecasts for steel demand over the period to 2010 and from 2010 to 2015. Up to 2010, world steel demand is expected to rise 4.9% per year. Steel demand is forecast to be 7% per year in India and 8.4% per year in China during this period. The figure for the rest of the world is 4% per annum.

Projections from 2010 to 2015, suggest a 4.2% annual growth in steel demand for the whole world, with growth in steel demand reaching 7.7% per year for India and 6.2% per year for China during the same period.

The IISI Executive Committee reviewed the forecasts at its meeting in Buenos Aires. They requested the IISI Economics Committee to study further the impact on steel use by region of changes in the location of manufacturing. They noted that capacity increases in China should reflect the slowing growth in the Chinese use of steel if imbalances in steel trade are to be avoided. The IISI Board of Directors adopted a new mission statement that emphasizes the industry’s commitment to sustainable development and profitability over the complete business cycle as well as reinvestment in new products and processes.