A Reuters" survey showed that the world steel industry is this year braced for the first output fall in more than a decade as capacity usage remains in the doldrums and consumers stay away from the market.
The survey of 10 analysts and industry experts, carried out over the last week, showed that global crude steel production is expected to fall by 9% to 1.210 billion tonnes in 2009, which will be the first drop in output since 1998. Global steel demand is expected to fall to 1.171 billion tonnes in 2009 and recover slightly to 1.255 billion tonnes in 2010, with Asian demand dropping sharply for the first time since the 1997 Asian financial crisis.
Mr Jeff Largey analyst at JP Morgan said that "We believe global steel production will fall by 12% in 2009 as capacity utilization rates will remain at depressed levels due to weak end market demand."
As the global recession knocked demand in key steel consuming sectors last year, such as automotives and construction, producers across the globe have been forced to slash output sharply, cut jobs and shelve investment plans. A strong performance in the first half of the year limited the fall in the whole year output to only around 1%, bringing the total number to 1.33 billion tonnes, down from 1.35 billion tonnes in 2007, the highest output ever recorded.
Figures from the World Steel Association showed that but in December 2008, production slumped by some 24% as the output cuts began to kick in, signaling a tough year ahead.
Mr Michael Shillaker analyst at Credit Suisse said that "The industry will not see deeper cuts in the second quarter than the first quarter. But the output will be lower significantly on a year on year basis."
In the survey, the mean for the 6 estimates for Chinese 2009 consumption stood at 431 million tonnes while consumption was expected to recover to 469.2 million tonnes in 2010. But with exports from Asia tumbling sharply due to lack of demand from its major customers, recession hit United States and Europe analysts dare not talk about a recovery, just yet.