The speed of collapse in steel demand throughout the world surprised the producers, consumers, distributors and analysts, including MEPS researchers. In our last issue, we did predict a slowdown in the rate of growth in production which had been reported for the first eight months of 2008. However, the quarter on quarter reduction in the final three months, at close to 65 million tonnes, will be an unprecedented figure in the history of the industry.
MEPS now expects global steel production in 2008 to be finalised at close to 1328 million tonnes. This equates to a 16 million tonne (1.2 percent) decrease on the year earlier outturn. Blastfurnace iron making will also be lower in 2008 compared to 2007. A reduction of more than 20 million tonnes is foreseen - down by 2.2 percent. In contrast, direct reduced iron production in 2008 will be reported at near 68.5 million tonnes. This represents an increase approaching 7 percent on the 2007 result. A small reduction is predicted for 2009.
The steel market is forecast to remain weak during the first half of 2009 in all parts of the world. Demand for motor vehicles, home appliances and residential properties is likely to remain poor. However, a degree of inventory building should occur but to levels well below those in the first half of 2008.Read the full report at MEPS
I am not surprised at the MEPS forecast, in fact I am a little more pessimistic about how long it will be before we see a recovery. I feel that consumers will be cautious and that demand will be slow to pick up, even when the immediate crisis is resolved, and that resultantly this recession may last a while.