OECD: Increased gap between steel capacity and demand

Tuesday, 05 June 2012 17:42:29 (GMT+3)   |  
       

At the recent 72nd Organization for Economic Co-operation and Development (OECD) Steel Committee meeting held in Paris, participants from OECD and non-OECD economies discussed slower growth expected for the global steel market in 2012, rising capacity for steelmaking and the risks resulting from these trends.
 
Anthony De Carvalho from the OECD Secretariat highlighted the strong slowdown in the global steel market starting in late 2011 and continuing in early 2012, which was mostly visible in Europe and Asia, adding that steelmaking capacities have continued to grow, leading to a large gap between capacity and demand.

Meanwhile, Karl Tachelet of the European Steel Association (EUROFER) stated that the forecasts indicate only a slight drop in real steel consumption in 2012. While an eight percent decline is expected in steel demand in the first half of the current year, the second half is forecast to see a mild improvement. The outlook for the steel using sectors indicates a mild contraction due to lack of funding and shifting demand.

Turkish Iron and Steel Producers Association (DCUD) general secretary Dr. Veysel Yayan underlined that, despite the uncertainties in the global market and restrictions on raw materials trade, comparatively strong domestic demand and import substitution will enable further growth of the Turkish steel industry, with the help of growing investments.

Regarding the steel industry in the NAFTA region, Barry Solarz from the American Iron and Steel Institute (AISI) said that the NAFTA steel market maintains a slow and modest recovery, with North America's steel production, capacity utilization and demand remaining lower than pre-recession levels. He pointed out that the NAFTA steel industry is concerned about steel export surges to the region in 2012, due to the economic downturn in the EU and slowing growth in China, as well as being concerned about global steel overcapacity.

On the other hand, the Latin American Steel Association (ALACERO) stated that steel demand in Latin America has been growing lately and the trend is expected to continue in the coming years, but the current consumption is increasingly supplied by imports rather than local production, negatively affecting the Latin American steel industry.

Additionally, the financial turmoil in Europe is also affecting the Asian economies and their main trade partner Japan. Shigeru Hagiuda from the Japan Iron and Steel Federation stated that the Japanese steel industry faces intensifying competition from never-ending capacity increases worldwide, amid downward pressure from weak overseas demand.


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