Alexey SHAPOVAL, expert with DerzhZovnishInform

Saying farewell to a year and, moreover, to a century always means summing up of the results. In 2000, the annual per capita consumption of steel differed by the world’s regions dramatically, from 340 kg in Europe to 20 kg in Africa and from 635 kg in Japan to 435 kg in North America. The following countries reported the record-high figures: Singapore (1,200 kg), Taiwan (970 kg), and Korea (830 kg). The global demand for steel added 50 mln. tons (8%) in 2000, and a further 16 mln.-ton increase (2.2%) is expected in 2001. Experts estimate the global demand for steel to add the annual 2% in the coming years. Steel output in 2000 may reach the record-breaking 846 mln. tons and progress another 2.4% in 2001 to reach 865 mln. tons. The global trade in steel will make up 27% of the total consumption in 2000 (around 200 mln. tons) and will stabilize or go a little below that figure in the current year.

Experts believe the widespread introduction of oxygen-converter steel production in the 1960s and the launch of continuous casting of thin slabs in 1989 to be the most important achievements of the steel-casting technology. The former lowered the smelting time from 9-10 hours to 45 minutes, whereas the latter decreased the time required for reprocessing of metal scrap into end products to 3-4 hours as well as lowered labor efforts to 1 man-hour per ton of steel. In the new century, we shall witness electric-arc furnaces with oxygen blasting (including bottom blasting), which are expected to drive the smelting time down to 20 minutes. The technology of continuous casting for sheets and plates will eliminate the rolling stage in manufacturing of stainless steel and, later, in making of carbon steel as well. This development will lead to profitable operation of steel-making micro-mills with annual outputs below 150,000 tons to fill in the small market niches. The share of conventional electric-arc furnaces in steel output is bound to go from 33% in 2000 up to 40% in 2010.

Entering the first year of the new millenium, the world’s largest institutes and organizations that deal with monitoring of the global steel market (such as IISI, Eurofer, and OECD Steel Committee) publish their forecast for the industry’s development. After the record-high steel output and consumption were reported in 2000, the leaders of the world’s steel industry are now publishing their views as regards the industry’s problems as well as those of the global trade in steel in such leading specialized periodicals as Metal Bulletin. The present review is based on these materials.

Ian Christmas, secretary general of the International Iron and Steel Institute, says that reliable short-term forecast is highly difficult to make owing to unpredictability of the directions of development of the leading economies. The past year was marked with widespread lowering of prices for steel-making companies’ shares, which may indicate a lowering of their capacity to bring in sufficient profit to support stable future development. Thus, the current year will call for fundamental changes that will provide the industry with the required investment. At the same time, owing to the fact that steel continues playing a major role in industrial development, there is no doubt about stable demand for steel from the developed countries as well as from the developing ones.


Steel industries of the EU countries enjoyed a favorable economic situation beginning with the middle of 1999 and further on during the entire year 2000. A 3.4% GDP growth in the EU countries in 2000 laid a solid foundation for the European steel industry’s future operation, and the annual steel output exceeded 160 million tons. As compared with the 1999 figure, the year 2000 witnessed a 6 mln.-ton (4.5%) growth of steel consumption, which hit 144 mln. tons. In response to high domestic demand for steel (especially, in automotive), steel imports augmented 37% over the first half of 2000. It is noteworthy that such an increase occurred primarily owing to flat-rolled and semi-finished steel. Gradual falling of the EURO/USD exchange rate by 25% led to high competitiveness of the EU-made steel on the global market. A recovery of the South Asian markets also contributed to this tendency. The resulting effect was an average 15% export increase (export of tubes and long rolled metal even exceeded the average), however, the physical balance of trade was unfavorable in the first half-year.

President of the European Independent Steel Association Horst Weitzmann thinks that the development prospects for EU markets are not optimistic owing to a slowdown of the economic growth (2.7% is forecast for 2001), uncertainty as regards EURO/USD exchange rate, and toughening of the monetary policy. Besides, being a formal association, the EU has not become a full-fledged union so far. Mr. Weitzmann does not think that governments should encourage a build-up of production capacities or aiming at winning of significant market shares at any cost because the main emphasis should be made on the rates of return.

According to President of Eurofer Ekkehard Schulz, the economic growth will continue in Europe in 2001, thus providing stable demand for steel. Taking into account the stocks of steel, the first half of 2001 may indicate a lower steel output figure than the one registered in 2000. However, the following evening of demand and supply will lead to a gradual price growth. Import will remain a problem impeding the stable development of the EU steel market. This is why, exporters ought to pursue a more realistic policy in order to avoid trade conflicts.

It is noteworthy that the European Union conducted three anti-dumping and anti-subsidiary inquiries in 2000. As a result duties were imposed against import of hot-rolled sheets made in Bulgaria, India, Serbia, Taiwan, and South Africa, plates from India, China, and Romania, whereas the inquiry as regards Turkish wire rod was cancelled. In response to the introduction of export duties on metal scrap by Russia, import quotas for 2000 were reduced by 12% to 108,650 tons. During the meeting of the OECD Steel Committee at the end of November 2000, the representative of the European Commission pointed out that if Russia made its temporary limitations on metal scrap exports permanent, the European Commission would suggest that its member-states should toughen their counter-measures concerning Russian steel on the EU market. Anxiety was also voiced about the changes in the Ukrainian legislation as regards export of scrap and the regulations on its acquisition and trade. Should these changes lead to export limitations, the EU must be ready to respond adequately.

It is expected that the other European countries will increase their consumption of steel by 2 mln. tons (6%) in 2000 and by another 5% in 2001. Owing to lack of the corresponding data, experts of the International Iron and Steel Institute (IISI) estimate the total steel consumption within the CIS countries at 32 mln. tons. Russia is forecasted to consume 4.7% more steel in 2000 than in the previous year and 1.7% more in 2001 than in 2000. A positive tendency towards growth of domestic CIS markets makes it possible to anticipate stable growth of steel consumption in these countries until 2005. OECD experts estimate the growth of steel production in the CIS countries at 18% in 2000. Thus, the annual steel output has reached 100 mln. tons and is bound to add 7% in 2001. Domestic consumption jumped 43% in 2000 (10 mln. tons up) and will augment by another 13.9% in 2001 to reach 37.7 mln. tons, which will make up only 32% of the figure registered in 1988 (the year when steel production in the USA topped out). Steel exports from the CIS countries totaled 44.5 mln. tons in 2000 (4.5% up) and are likely to remain at this level in 2001.

Notwithstanding the growth of oil prices, activity of the primary sectors of the EU economies will be relatively high over the year 2001, due to further economic growth and favorable international situation. Steel consumption is also forecast to go up, although this may not influence steel production. It is likely that the growing consumption will only lessen the present stocks for sale. As a result, steel production in 2001 will either stabilize at the present level or even go down a little, owing to high steel output in 2000. EU’s steel imports will remain high, whereas export will augment due to the high-added-value products, even though new exporters, such as China, Egypt, South Korea, and Thailand have recently emerged on the global market. The time period of up to the year 2005 is expected to show stable growth and worldwide steel consumption of 150 mln. tons at the end.


American consumers (primarily, automotive manufacturers) make up the main driving force for the North American steel market, on which steel consumption grew by 4% in 2000. Like Europe, the USA pays most attention to the inflation, which is caused by growing prices for energy and the increase in steel imports, which leads to stockpiling of significant quantities of steel. The recent data indicate that the USA continues experiencing a slowdown of GDP growth. The subsequent lowering of the interest rates was a natural reaction, which is to make a positive effect on the stock market as well as on the foreign exchange market. In this case, capital investment in the country’s economy ought not to go down and it becomes possible to expect further growth of steel consumption. In general, NAFTA’s steel market is becoming very dynamic, namely, aggregate steel consumption by the NAFTA countries is forecast to reach 150 million tons by 2005.

According to the President of the American Iron and Steel Institute Andrew Sharkey, at the beginning of 2001, the economic situation in the US steel industry reminds that at the beginning of the 1980s. The global over-production of steel throughout the past year led to increased stock of steel in the USA. This was accompanied by falling demand for this product in the country over a few last months of 2000. These factors collectively produced excessive stock of steel and, consequently, brought about a collapse of domestic prices for this commodity. Internal steel supplies totaled 108 mln. tons in 2000, mainly due to high industrial activity at the beginning of the year. However, the latest data indicate that American steel imports came to 38 mln. tons (the record figure was registered in 1998 at 41.5 mln. tons). A growth of running costs (for example, owing to a jump of prices for natural gas), along with the inflow of cheap steel from abroad, puts under question the profitability of domestic steel industry in general. Manufacturing of cars, industrial equipment, and other products dropped at the end of 2000 and is going to continue going down in 2001, producing a further decline of demand. Construction industry is expected to contribute to steel demand as replacement and repair of thousands of bridges will require a lot of high-strength steel. Metal roofing is also becoming highly popular. However, even the construction industry may experience a recession in 2001 and 2002. At the same time, many transportation and infrastructure projects are currently underway around the country.

Andrew Sharkey supposes that difficult conditions for steel business will prevail at least in the first quarter of 2001. The first half-year will be worse than the average, whereas some improvement is possible in the second half, which will highly depend on a significant curtailment of steel imports and better functioning of the US economy and the North American economy in general.

Experts believe that South America now has a good opportunity for economic growth until 2005, which will be accompanied by further increase in steel consumption. Secretary General of the Latin American Iron and Steel Institute Enrique Alvarez notes a stir on the South American market. The region’s GDP is supposed to add 5% and the registered steel consumption may augment by 10% to come to 52.3 mln. tons of crude steel and 41.1 mln. tons of finished products in 2001. Brazil has re-entered a stage of economic growth, namely, steel consumption added 12% in 2000 to reach 16 mln. tons and will add another 1 mln. tons in 2001. However, Argentina’s steel consumption is currently 20% below the 1998-99′ figures. Annual per-capita consumption of steel in the region is forecasted at 97 kg, which is lower than the average worldwide figure so far, but if the planned 6% growth continues, then in five years, per capita consumption will reach 110 kg per annum, i.e. the figure registered 20 years ago.

In 2000, crude steel output added 11.5% and will continue growing in 2001, although not so fast. Steel production is expected to go up to 59.6 mln. tons. Domestic trade in steel will make up 22.3% of the export figure to reach 4.3 million tons. The aggregate export of the region’s countries will highly depend on the economic situation in the USA and Asia. Under the favorable forecast, this figure will make 19.3 mln. tons (5% up). Steel imports in 2001 will be significantly lower than in 1998 (9.3 mln. tons), the rates of growth reported in 2000 will remain unchanged (a 4.3% surplus). The forecast figure for the region’s aggregate import is 6.3 mln. tons in 2001. Smuggling of steel from CIS countries, Turkey, and China is the point of the greatest anxiety at the moment.


Once again, Asian economies showed the capacity for growth after the crisis had been left behind. Production of various commodities and construction were two powerful factors that contributed to increased demand for steel. In 2000, the aggregate Asian demand for this material added 22 million tons (7%) and will gain other 13 million tons (4% up) in the current year to make up 44% of the global market.

Japan’s economic growth is mainly stipulated by an inflow of private capital, which has begun to tend more towards information technologies in the post-crisis period. This is why, in 2000, steel consumption in Japan increased by only 2.5 million tons. However, after restructuring of the steel stock kept by distributors, the growth of visible steel consumption may go up to 5 million tons. Smaller steel stock and lowering steel consumption are forecast for the current year.

Akira Chihaya, president of Nippon Steel Corporation, thinks that the Japanese economy recovered significantly last year. It was the first time in three years that the country’s steel output exceeded 100 million tons. High domestic demand for steel and active steel exports to other Asian markets in the first half of 2000 were behind this achievement. However, he points out that the future of the Japanese and regional steel markets is far from very optimistic. The economic climate for exports is quickly becoming unfavorable. This tendency is being accompanied by a downswing of business activity in Asia, which began in the second half of the last year, and strengthening protectionism tendencies in the global trade. The stock of steel within the country tended to grow, whereas on the other hand, steel imports became more threatening. Globalization spurs global competition, hence, the process of selection of suppliers and their rating become crucially important in this situation. Thus, Japanese products have to become more competitive in order to launch a new growth of the country’s metal industry.

Until recently, China’s economy has indicated fast growth. According to IISI experts, output of end products made of steel increased by 10.2% over the first eight months of 2000, whereas imports in the same period added 1.6%. If the government imposes tough regulations on production and import, the domestic steel consumption will reach 134 million tons in 2000. Moreover, if the country’s economy develops mainly under the influence of demand for steel, this figure may turn out to be even higher. Accurate middle-term forecast for China is rather difficult to make, because, owing to directive control over the economy exercised by the authorities, upswings or downswings of millions of tons are possible even in 2001 thus leaving no chance of making an accurate prediction for the period until 2005. Analysis and OECD experts indicate that crude steel output in China increased by 2% (126 million tons), consumption added 1.2% (1.5 million tons up), imports went 14% up, and exports skyrocketed 95% in 2000. Experts say that in 2001, steel output is likely to add 1.4%, consumption 2% and import 8.5%.

An upsurge of demand for steel in South Korea in 1999 (9 million tons up, which is equal to 36%) is unlikely to have changed in 2000 either. Due to favorable export transactions, the country’s economy, according to preliminary estimates, registered the GDP growth of 9.2% and steel consumption totaled 37.88 million tons. The year 2001 supposes a slower economic growth (around 6%). Consequently, demand for steel will go 4.6% down to 36.15 million tons. Steel output will also curtail by 2% to 47.31 million tons, exports will indicate a 2.3% growth to 13.9 million tons and imports will drop 14.7% to 2.9 million tons, owing to decreased demand and accumulation of internal reserves.

Domestic demand for steel in ASEAN countries highly depends on the construction industry, which exhibited a rather weak growth in 2000. Steel consumption added only 3% against the 1999 figure, although export raised by nearly 10%. These figures are forecast to keep at approximately the same level in 2001, although they will highly depend on the state of the US economy.

According to preliminary forecast by IISI, Japan is the sole leading world steel consumer, where demand for steel may be going down until 2005 because Japanese economy’s growth is rather slow, which cannot but affect the steel sector. Concerning other Asian countries (Taiwan and South Korea are leaders among them), their successful overcoming of the crisis means a significant growth of steel consumption up to the year 2005. Japan, China and other Asian countries, which now aggregately account for 44% of the global steel consumption, shall increase this figure to 45% by 2005.


Australian steel market was rather stable, due to the construction projects for the Olympic Games and a boom of residential construction caused by the tax reform. Now these factors are left behind and demand for steel is expected to gradually go down. A steady growth of GDP and rational export policy in South Africa provides the annual 4% growth of the country’s steel market, which now has the consumption capacity of 4 million tons. Data on the Middle East are uncertain. In their forecast for the time period until 2005, experts do not expect significant changes on steel markets of these three regions.

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