The global steel industry is recovering faster than expected from the recession but the strength and timing of the upturn varies across regions, according to industry and government officials at the OECD's Steel Committee meeting in Paris held on May 6-7, 2010. Further improvements are expected in the short term, although it is said that it may take years for some parts of the sector to fully recover.
"The global steel industry is experiencing signs of recovery from the recession. Worldwide, steel mills are now running at approximately 80 percent of capacity, after having slipped below 60 percent at the end of 2008. The recovery that began around mid-2009 has been supported by government stimulus spending and the rebuilding of inventories in some economies. The strength and timing of the upturn has varied across regions, however. Emerging markets in Asia are leading the recovery, supported by government stimulus spending on infrastructure and a rebound in manufacturing activity. Demand for steel in the developed economies started to improve at a later stage, the upturn has been slower, and the recovery is occurring from a lower base. Consumption of steel across much of the OECD is still significantly below the pre-recession levels of mid-2008," said OECD Steel Committee chairman Risaburo Nezu.
The OECD's short-term outlook suggests further improvements in the market, though it may take several years for some industries to fully recover from the downturn. However, some important changes are to be anticipated. While past developments have been primarily driven by China, in the future global production, consumption and capacity developments will also be heavily influenced by other emerging economies. As for developments in China, delegates noted that demand growth for steel might slow down while capacity continues to increase. Questions were raised as to how the Chinese industry would deal with such a situation and the impact this may have on the global steel market. Delegates expressed their interest in China's forthcoming iron and steel development policy, to be released in June.
Concerns about the market structure of some raw material industries and the effects this may have on the stability of the steel and downstream industries have intensified. Delegates also called for improved transparency and a lifting of barriers affecting trade of raw materials to improve the industry's unrestricted access to raw materials. This is an issue that is appropriately addressed by governments and their competition authorities.