When steel experts representing various fields within the industry met in New York City on Tuesday during the SBB Global Steel Markets 2010 conference, a plethora of issues were discussed; however, the apparent theme that developed throughout the day was in regards to China's impact on the global and US steel industry, and in particular, the future of global steel consumption.
Mr. Malay Mukherjee, CEO, Essar Steel Business Group, stated that while estimated world steel consumption will be at 1272 million net tons (nt) in 2010, representing a 20 percent increase over 2009, consumption will continue to vastly increase, to 1861 million nt by 2020. Mukherjee commented that China and India will be the primary contributors to the growing steel demand, while NAFTA, EU and Japan will demonstrate limited growth during the next 5-10 years. Meanwhile, Mr. C. Lorenco Goncalves, Chairman, President and CEO, Metals USA Holdings Corp., attributed future increases in demand over the next 5 years to be driven by China, with their 5-year residential housing plan, and Brazil, mostly due to preparations for hosting the World Cup and Summer Olympics.
Mr. Bernd Nuenkirchen, Vice President of Wire Rod, Countinho & Ferrostaal, further emphasized the impact that China's consumption growth has on US scrap. US scrap exports to China more than doubled in 2009 over 2008, with 6,848,997 nt and 3.101,667 nt respectively. However, outside of scrap, Mr. Brian Wigley, Director of Marketing and National Accounts, Severstal North America, stated that value-added finished steel products have the most export potential in Central and South America.
Taking a gloomier position than most other speakers during the conference, Mr. Peter Marcus, Managing Partner, World Steel Dynamics Inc., did not foresee China's consumption growth booming much past the next few years. "Starting in 2013, World Steel Dynamics anticipates China's yearly growth to be 3 percent." Marcus also poignantly stated that although world steel demand will continue to grow, it may be at a slower rate than many others predict, and over production will be a real issue to contend with especially over the next year. In addition to the anticipated 4 million nt of annual flat rolled steel production coming online at the ThysseKrupp Calvert, Alabama plant, there will also be an additional 10 hot rolled coil (HRC) mills coming on line in China, another 4 in Turkey, 2 in Japan, and 1 more in Morocco.
Overall, the mood during the conference was of cautious optimism. Most companies that have been able to weather the recessional storm to date, should be in a better position to take advantage of manage the anticipated more modest (comparatively speaking to 2010 and 2010) peaks and valleys in 2011.