China slowdown to push steel demand growth down in 2015 - Worldsteel

By Maytaal Angel

LONDON (Reuters) - Global steel use should grow at a slightly slower pace this year than last because of China's slow down, although elsewhere steel use is mostly improving and 2016 prospects look brighter, the World Steel Association said on Monday.

"We hear increasingly positive use from developed economies, especially ... the euro zone. In the developing world we see increased optimism about India and growth in the MENA and ASEAN countries," said Hans Jurgen Kerkhoff, chairman of the group's Economics Committee.

"While these developments will not be enough to counter-balance the deceleration of China, we expect to see gradually improving growth prospects beyond 2016," he added.

Global apparent steel use - steel both known and assumed to have been used - is expected to grow by 0.5 percent this year to 1.544 billion tonnes, compared with growth of 0.6 percent last year, Worldsteel said.

This primarily because use in China, which accounts for about half of the world's steel consumption, is expected to fall 0.5 percent to 707.2 million tonnes from last year.

Next year, however, global apparent steel use is expected to grow 1.4 percent to 1.566 billion tonnes. Emerging and developing economies should be up 4 percent, developed economies 1.8 percent.

Global steel prices are nonetheless currently languishing at their lowest levels in nearly six years amid structural oversupply.

Usage in China, the world's second largest economy, is falling and it produces about 100 million tonnes more than it consumes. Beijing is introducing measures to cut excess steel capacity but there is a question about how successful it will be.

Also a concern, especially for miners of iron ore, a key steelmaking ingredient, is whether Chinese steel use has peaked.

Iron ore prices have plunged some 60 percent since last year after a concerted effort by major producers to expand output and boost their market share by driving out high cost rivals.

An iron ore glut has since built, one that would not easily disappear if Chinese steel use is in long term decline.

"China is at the beginning of long and flat peak steel use. The peak might stretch over 3-5 years, with (demand) hovering around 720-750 mln tonnes, then we may see a gradual decline to 680 million tonnes in the mid-2020s," Worldsteel director general Edwin Basson said.

"So we don't see a rapid increase in iron ore costs in our industry," he added.

(Reporting by Maytaal Angel; editing by Jeremy Gaunt)