Steel demand upbeat, led by BRIC nations Steel consumption in...

Steel demand upbeat, led by BRIC nations

Steel consumption in the BRIC nations increased at a steady pace during the
decade. China, followed by India, have witnessed their steel consumption rise by a
CAGR of 18.4% and 9.54% respectively in the last five years. Compared to these
two countries, the demand growth in the other two has been slower. Brazil and
Russia have witnessed their consumption increase by a CAGR of around 5% in the
last five years.

But in the next five years, we expect Chinese consumption to moderate from its
five year CAGR of 18.4% to 11.1% in the next two years. Consumption from India
is expected to rise by a CAGR of 12.7% in the next two years as construction
spending in the economy is set to increase. In the next two years, Russia is
expected to outpace India and China and lead the overall BRIC nation’s
consumption. Russian steel consumption is expected to increase by a CAGR of 16%
in the next two years, while Brazil is expected to witness its consumption grow
around 10% in the next two years.

The BRIC countries, which accounted for about 41% of global steel demand in
2006, will again be leading the growth with an expected increase of 12.8% for
CY07 and 11.1% for CY08. Overall, 77% of world consumption growth in CY07 and
71% in CY08 will be seen in the BRIC countries.

China’s steel use is expected to grow by 11.4% in CY07 and 11.5% in CY08,
accounting for 35% of the world total. For India, forecasts for apparent steel use,
point to an increase of 13.7% in CY07 and 11.8% in CY08.

The Russian market is expected to grow by 25% for CY07 and 9.5% for CY08. The
rise is mainly led by the energy and construction sectors. Also, steel consumption in
Brazil is expected to increase by 15.7% for CY07 and 5.1% for CY08, with strong fixed
capital formation partly driven by public investment programs.

The International Iron and Steel Institute (IISI) forecasts in October show that CY07
will be another strong year for the steel industry with apparent steel use rising from
1,120.9mn tons in CY06 to 1,197.6mn tons in CY07, an increase of 6.8%. It also
expects consumption to rise further by 6.8% in CY08. These figures were revised
upwards by 0.9% for 2007 and 0.7% in CY08 over its March forecast.