Iron ore prices are unlikely to match last year’s highs as steel use grows at the slowest pace in three years amid concerns a faltering global economy will curb demand from Europe to China, the world’s biggest steelmaker.
Ms Natalie Robertson an analyst at Australia & New Zealand Banking Group Ltd said that “Steel production this year is going to be a little softer than we saw last year.” She added that “Ore prices won’t be as high as last year. Last year we felt it was at unusually high levels.”
Global steel use will rise 4.5% this year, less than the 5.4% forecast in October by the World Steel Association, and may be as low as 1.2%, according to a Bloomberg survey. The gain, the lowest in three years, may be tempered by cooling economies in China and Europe, where orders for steel products for homes, cars and machinery are stagnating and will keep the alloy’s prices and overseas shipments muted.
Mr Daniel Hynes a director of commodity research at Citigroup Inc. in Sydney said that “Our base case is Chinese steel growth is going to slow from the 8% to 10% range they’ve been running at over the past few years. We’re looking at 3 % growth” this year.
Steel production in China, which accounted for about 46 percent of the global total in 2011, fell in each of the six months through November before gaining in December, according to the World Steel Association, the Brussels-based trade group that promotes the steel industry.
China’s steel industry will face a ‘grimmer’ test in 2012 on reduced demand and rising costs of fuel and iron ore, Zhu Hongren, spokesman and chief engineer for the Ministry of Industry and Information Technology said at a briefing in Beijing. The nation boosted annual steel output by the slowest pace in three years in 2011 as its economy cooled last quarter, cutting demand.
China’s crude steel production gained 8.9% last year to a record 683.3 million tons, the National Bureau of Statistics said on January 17. Annual production gained 10% in 2010 and 13% in 2009, after climbing 2.3% in 2008, according to the China Iron and Steel Association.
(Sourced from Bloomberg)
