Increasing Demand from Developing Countries to Drive the Global Steel Market, According to a New Report by Global Industry Analysts, Inc.

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GIA announces the release of a comprehensive global report on the Steel markets. Global apparent consumption of Steel is projected to reach 2.2 billion metric tons by 2018, driven by rising demand from developing countries that are witnessing massive infrastructural and industrial development activities. Technological innovations and recovering business activity across major end-use sectors such as manufacturing, automotive, residential construction, power and heavy machinery also bodes well for the future of the market.

Steel: A Global Strategic Business Report

Follow us on LinkedIn – Touted as a true barometer of the economic health of a country, steel finds extensive applications in a multitude of industries across the globe. Surplus steel production capacity in China is beginning to raise concerns, especially against a backdrop of slowing consumption patterns. Consumption of steel in developed countries is declining as a result of key end-user industries like construction, automotive and heavy machinery weakening amidst the pressure of widening Government fiscal deficits. Western economies in general are beginning to collapse under the weight of all their debt. Also, unlike the rapid V-shaped recovery, which is the typical resurgence pattern from periods of recession, the US economy even today continues to remain challenged by high unemployment and is mired with weak and anemic recovery, reflecting a fundamental shift underway in the world economy. In other words, developed economies are undergoing a structural change burdened by financial conditions that are now the “New Normal”, and are entering into a new era of depressed GDP growth.

The decline in demand in the developed markets is aggravating China’s already ballooning surplus capacity issues as the largest exporter of steel worldwide. In addition, the slowing down of the Chinese economy is also creating huge excess capacities, given that the country is one of the largest consumers of steel. Key factors attributed to the slowdown in the world’s third largest economy include policies legislated by the Chinese Government to artificially cap spiraling property prices in a bid to control property speculation and a possible bubble in the housing sector, and curb borrowing of local governments.

While China continues to feel the heat of excess capacity, Brazil on the other hand, is threatened with premature deindustrialization defined as the reduction in the contribution made by heavy machinery/manufacturing industries towards a country’s economic growth. The gradual weakening of the clout of the domestic manufacturing industry and its reducing share in the GDP is largely because of the depreciation of the US dollar and the ensuing strengthening of the domestic currency, together with low cost imports from Asian countries. The implications for deindustrialization for the steel industry include reduced demand, heavy price competition as a result of low cost imports, reduced profitability and haphazard development of supply chain and distribution efficiencies.

The uncertainties created by Europe’s debt crisis, is also impacting growth. Steel consumption in Italy and Spain has especially been hit harder than other EU economies given the higher vulnerability of these economies to slip into recession. Germany, the hitherto resilient European economy is also forecast to witness lower demand for steel in the upcoming year. The continued uncertainty in Europe caused by the periodic flaring up of the region’s debt crisis and the economic drag exerted by the deleveraging process underway in the region’s private, public and financial sector is overshadowing the outlook for steel in the region. Depressed manufacturing/heavy machinery, construction, and automotive industries are fingered as responsible for reduced steel consumption. The downward spiral of the Euro crisis has triggered volatility in the housing and construction markets in the region primarily because of the high public debt held by most regional governments and the implementation of austerity measures that limit public expenditure and financing for infrastructure projects.

Despite the immediate challenges, future growth in the steel industry is forecast to stem from rapid urbanization in developing countries, since strong urban concentration will trigger increases in infrastructure expenditures, and urban planning. The creation of large megacities involves the construction of high-rise buildings and skyscrapers which in turn provides a fertile environment for the growth in demand for steel. Against a backdrop of growing need to develop sustainable cities for the future, ample opportunities are in store for the steel industry. Moreover governments in developing countries are earmarking massive budgets for infrastructure development, given that good quality infrastructure is important for sustainable development and is a key ingredient for achieving trade competencies in the global economy.

BRIC economies represent the market engine capable of driving growth in the short-to-medium term period. However, growth in these countries is slowing down largely a result of these countries becoming more interconnected by trade to the developed economies. Against this backdrop, a new group of countries are emerging over the horizon dubbed the CIVETS, comprising Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa. These countries are being touted as the next generation of tiger economies characterized by rapidly growing domestic consumption, rising middle class, cheap labor (cheaper than China & India) favorable demographics such as, large base of young, affluent and employed population, unlike the aging, retiring baby boomers in the developed countries. Given the subtle shift in geopolitical power and standard of living from west to east, significant opportunities are available in the CIVETS region in the next few years. As economic advancement and development spreads to this second tier of lucrative markets, the region will emerge into a perfect haven for steel manufacturers seeking international expansion in the long-term.

As stated by the new market research report on Steel, Asia-Pacific region represents the largest regional market for steel accounting for a lion’s share of global consumption. In terms of end-use, the Construction sector represents the largest consumer of steel across the globe, while Automotive applications emerge as the fastest growing end-use segment trailing a CAGR of 6.4% over the analysis period.

Key players in the marketplace include Anshan Iron & Steel Co., Ltd., ArcelorMittal, Baoshan Iron & Steel Co., Ltd., Evraz Group S.A., Nizhniy Tagil Iron and Steel Works, Novokuznetsk Iron and Steel Plant, Evraz Vítkovice Steel Gerdau S.A., Hebei Iron and Steel Group Company Limited, JFE Steel Corporation, Jiangsu Shagang Group Co., Ltd., Nippon Steel & Sumitomo Metal Corporation, Nucor Corporation, POSCO, Riva Group, Siderúrgica Venezolana SIVENSA S.A, Tata Steel Ltd., Tenaris S.A., Tenaris Tamsa, ThyssenKrupp Steel Europe AG, and United States Steel Corporation, among others.

The research report titled “Steel: A Global Strategic Business Report” announced by Global Industry Analysts, Inc., provides a comprehensive review of market trends, drivers, product overview, competition, product introductions/innovations, and recent industry activity. The report offers market estimates and projections in volume terms for regions such as the United States, Canada, Japan, Europe (France, Germany, Italy, UK, Spain, Russia and Rest of Europe), Asia-Pacific (China, South Korea, India, Taiwan and Rest of Asia-Pacific), Middle East (Iran, Saudi Arabia, UAE, Israel, Syria and Rest of Middle East), Latin America (Brazil, Mexico, Argentina, Chile, Colombia, Venezuela and Rest of Latin America), and Africa (South Africa, Egypt, Algeria, Nigeria, Morocco and Rest of Africa). Key end-use segments analyzed include Construction, Automotive, Machinery, and Other Domestic/Commercial Equipment, among others.

For more details about this comprehensive market research report, please visit –

About Global Industry Analysts, Inc.
Global Industry Analysts, Inc., (GIA) is a leading publisher of off-the-shelf market research. Founded in 1987, the company currently employs over 800 people worldwide. Annually, GIA publishes more than 1300 full-scale research reports and analyzes 40,000+ market and technology trends while monitoring more than 126,000 Companies worldwide. Serving over 9500 clients in 27 countries, GIA is recognized today, as one of the world's largest and reputed market research firms.

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