Here’s Why Global Steel Demand is On the Rise
Global steel demand is expected to rise 6.5% to 7% this year, with significant growth in developing countries (NYSE:EEM) that are building up infrastructure and making architectural advances, while developed countries have been witnessing more modest growth, but growth nonetheless.
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Lakshmi Mittal, chief executive of ArcelorMittal (NYSE:MT), the world’s largest steelmaker by volume, recently expresses the belief that steel demand will continue to grow in 2011 after rising to a new record of 1.4 billion tons last year, up 10% from the previous year. China in particular has seen a lot of growth in the last few years, and is forecast to grow 7% this year. And Chinese growth isn’t expected to slow any time soon, as the the country’s central stages are now only in the initial stages of development and consumption.
Including China (NYSE:FXI), there are 4 billion people around the world living in developing economies — that’s more than half the world population. Of those 4 billion, 250 million are expected to move into cities by 2020, forcing urban areas to continually build in order to meet the demand for housing. Even well-developed countries with substantial infrastructure and little economic growth like the U.S. and a fair part of the European Union are recovering their footing and looking at growth in 2011, though far less substantial than in developing countries.
Mittal (NYSE:MT) hopes that, as growth speeds up, the steel industry could return to pre-financial crisis levels by 2015. But he notes that the global economy is still in a fragile state, especially developing countries, so there’s no assurance that steel prices will continue to rise, especially if Greek default triggers another economic meltdown.
Steel stocks to watch: Steel Dynamics Inc. (NASDAQ:STLD), Haynes International Inc. (NASDAQ:HAYN), Kubota Corp. (NYSE:KUB), Mechel OAO (NYSE:MTL), United States Steel Corp. (NYSE:X), POSCO (NYSE:PKX), Allegheny Technologies Inc. (NYSE:ATI), Nucor Corp. (NYSE:NUE), and AK Steel Holding Corp. (NYSE:AKS) are all posting gains today.