Outlook for the steel markets and future projections

Friday, 23 May 2008 18:09:07 (GMT+3)   |  
       

The opening address at the 3rd SteelOrbis Turkish Steel Market Conference being held in Istanbul on Friday was delivered by SteelOrbis CEO Murat Eryilmaz, who welcomed all participants to this year's event. Secretary General of the Turkish Iron and Steel Producers Association Veysel Yayan then took the stage to give the introductory presentation, in which he focused on recent developments in the iron and steel industry, both globally and in the Turkish context, and also made projections for the future.

According to recent statistics, the global steel production capacity is expected to reach 1.88 billion mt in 2010 and, despite the slowdown in its rate of increase, China will be the main driver of world steel capacity growth. After China, the CIS region and the Middle East are also forecasted to show strong expansion trends. During the 2001-2007 period, the average annual steel production capacity of the CIS region was recorded as 16 million mt, accounting for 3.3 percent of the global figure. This figure is expected to reach 43 million mt in the period 2008-2010, claiming a 13.4 percent share in the global markets.

World apparent finished steel consumption is expected to increase by 13.4 percent (reaching 161 million mt) between 2007 and 2009. The CIS, North and South America and the Middle East are expected to continue their strong consumption growths. As regards other world regions, apparent finished steel consumption in Asia is projected to increase by 17.4 percent (reaching 115 million mt) during the same period. Asia will be responsible for 72 percent of growth in world steel consumption, with China, India and South Korea being the main countries leading the way. Meanwhile in Europe, Poland, Turkey, Russia and Ukraine are expected to show strong growth. Moving to the Middle East, it is estimated that apparent finished steel consumption in the region will increase by 21 percent to around 53.6 million mt in 2009.  The strongest growth trend in the Middle East is expected to be observed in Saudi Arabia. As regards the emerging giant China, its share in world steel consumption is expected to reach 36.7 percent in 2009 and it is forecasted to account for more than 50 percent of world steel consumption growth in the period in question.

Although Chinese steel production growth has been slowing down since 2004, the country's steel consumption growth rate started to show a rapid increase from 2006 and it surpassed the production growth rate in Q1 2008. From 2004, when China's steel production growth began to experience a slowdown, China became a net steel exporter and strengthened its position in exports during the following years. In the first quarter of 2008 Chinese steel exports and net steel exports started to slow down. In Q1, China's total steel exports declined by 32 percent year on year and while the country's net steel exports fell by 43 percent to 6.4 million mt.

World crude steel production is expected to increase 1.56 billion mt in 2010 and 1.67 billion mt in 2012. During the same period, steel production in China is expected to reach 639 and 732 million mt respectively.

Among the top steel producing countries in the world, Turkey ranks in 11th position, following closely on the heels of Italy. Due to the slower growth in Italy's production, the gap in production between Italy and Turkey decreased from 11.6 million mt in 2001 to 5.75 million mt in 2007. Considering the slowdown in Italy's production and even the 0.4 percent decrease in 2007, Turkey is expected to become the 10th largest steel producer in the world by the end of 2010, aided by the crude steel production investments in the country, especially inflat steel production.

Turkey's crude steel production capacity is expected to reach 44.4 million mt in 2010 and 47.5 million mt in 2012. The main drivers of this capacity growth will be flat steel expansion projects and new flat steel production investments. The country has been exporting more steel than it imports; however, since 2001, the gap between its exports and imports has been narrowing due to the increasing consumption in flat steel consuming industries. In terms of value, Turkey's imports have been worth more than its exports since 2005; this is because of the growth observed in domestic consumption against a background of stable flat steel production of around 3 million mt. On the other hand, by 2010 the country's crude and finished steel consumption is forecasted to reach around 420 kg per capita.

In 2007, Turkey exported 1,596,658 mt of semi-finished steel, 1,214,882 mt of flat steel, 10,764,475 mt of long steel and 189,243 mt of special steel. Meanwhile, in the same year it imported 3,391,335 mt of semi-finished steel, 7,896,562 mt of flat steel, 945,704 mt of long steel and 972,429 mt of special steel.

Overall, for the year 2010 Turkey's flat steel production is projected to reach around 15 million mt,  crude steel production is projected at around 33 million mt, and crude steel consumption per capita at over 420 kg. Turkey is also expected to strengthen its position as a net exporter of steel due to its increasing flat steel production, which will enable the country to achieve a more balanced structure in its domestic production.


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