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The strong intensity of steel use in some of the world’s most dynamic economies – many benefiting from high oil prices – “may be more influential” in maintaining global steel consumption growth rates at 6-7%/year than aggregate demand in Brazil, Russia and India, according to Peter Hickson of UBS, an investment bank. Hickson, who is head of global basic materials strategy at UBS Investment Research was a key speaker at the Middle East markets’ conference being held by Steel Business Briefing in Dubai.
Recent UBS research has focussed on the so-called “Next Billion” countries. They include commodity rich developing countries in South East Asia, Eastern Europe, Latin America, Africa and Turkey whose populations comprise more than one billion people. They have gained – in recent years – from cash inflows that have been directed to infrastructure development, and that in turn has stimulated above average steel consumption.
Indeed, the growth in demand for steel in the Next Billion has overtaken that in many other basic materials in recent years. Steel demand growth has averaged 5%/year, while that in copper has been 4%/y and aluminium 4.5%/y. Paper has managed a mere 1%/y.
Moreover, it is the Next Billion countries that have in the last year or so helped absorb Chinese exports. This year Hickson is forecasting net Chinese exports of 66m tonnes, compared with 33m t in 2006. However, the Beijing government may move to curtail such exports in the coming months, possibly creating some shortages, others suggest to SBB.
Meanwhile, infrastructure responses to climate change involving both carbon sequestration and defensive investments could take over in maintaining steel demand when consumption in the BRIC and Next Billion countries reaches a peak in some 10-15 or more years. And any such responses could |
