The world demand for steel is expected to return to 2008 levels, confirming fears of raw material cost increases, according to an EEF report.
The document from UK Steel, a division of the EEF, comes after Beama’s Steel Products Group warned about the possibility of “turbulent times” for steel prices last January.
A spokesperson of the Group says that although demand in Europe is picking up, it is the emerging nations of China, India, Iran and some North African states, which are anticipated to consume far more steel. The pace of demand in these countries has hardly slackened. At one stage, China is estimated to have been producing 50% of the world’s steel supply. This will affect the domestic re-stocking pattern as the 2010 season contract negotiations progress.”
Steel consumption collapsed in 2009, but the Chinese output did no’t stop rising, adding pressure on raw material supplies. In 2009, steel output fell by 30% in the European Union, 26% in Japan and 36% in the United States (globally, by 8%). In China, it grew by 14%.
The dramatic cost squeeze experienced by European steel producers may get worse in 2010. As a result, to recover from increasing costs, producers are likely to raise prices.
“Already, there are signs of price volatility in coal, coking coal and crude steel – the raw ingredients needed to make steel.