NAFTA, South America steel demand seen falling

OREANDA-NEWS. October 14, 2015. Demand for finished steel in the North America Free Trade Agreement (NAFTA) region is forecast to fall by 2.7pc this year, because of the strengthening dollar and the downturn in the energy sector, the World Steel Association said.

Demand among the NAFTA members, the US, Canada and Mexico, is expected to fall to 140.8mn t this year from 144.8mn t in 2014, when demand surged by 11.4pc, the association said in its latest short-range outlook yesterday. NAFTA demand is expected to recover by 2.1pc in 2016.

"While the US economic fundamentals continue to remain solid, steel demand in the US is expected to show negative growth in 2015, due to currency appreciation and a slowing energy sector," the association said yesterday at its annual conference in Chicago.

US demand for finished steel is forecast to fall by 3pc to 103.8mn t this year, then rise by 1.3pc to 105.2mn t in 2016. Mexico's demand will rise by 4.8pc to 23.6mn t this year, then rise another 4.1pc next year.

Brazil's demand is forecast to drop by 12.8pc this year to 22.3mn t, then edge up by 0.5pc in 2016. Brazil's demand fell by 8.6pc last year. Brazil is facing its worst recession in 25 years.

Demand in Central and South America is forecast to fall by 7.3pc to 45.2mn t this year, recovering by 2pc in 2016.

World steel demand is forecast to drop by 1.7pc to 1.51bn t this year before edging back by 0.7pc next year. Demand in China, the world's biggest consumer and producer of steel, is forecast to fall by 3.5pc to 685.9mn t after going down by 3.3pc last year. China's economic growth this year is forecast to be the slowest in 25 years.

"The steel industry has, for the time being, reached the end of a major growth cycle which was based on the rapid economic development of China," Hans Jurgen Kerkhoff, chairman of the worldsteel economics committee, said.

"The steel industry is now experiencing low growth, which will last for the time it takes for other developing regions of sufficient size and strength to produce another major growth cycle," he said.