Top steelmaker ArcelorMittal sees global steel demand slowing to 5-6 percent in 2011 from an estimated double-digit expansion this year due to a weak global economy, the head of the company's India and China operations said on November 24.
Vijay Bhatnagar, chief executive for the two countries, also said it is "too early" to determine whether escalating tensions in the Korean peninsula will have any impact on the global economy.
"Demand growth compared to 2010 will be slow because 2009 was a low base," Bhatnagar told Reuters on the sidelines of a Steel Business Briefing conference.
Bhatnagar said steel demand will be led by emerging economies - Brazil, Russia, India and China - while "growth in the developed world is going to be slow because of the economic crisis and because of maturing economies."
The World Steel Association said in October it sees global steel demand easing to 5.3 percent in 2011 from a projected 13.1 percent growth this year on slower demand from China, the world's top steel market.
China's steel industry has been beset by a supply glut that has hindered a sustained pace in steel price gains, and Bhatnagar said he expects China's steel sector to continue consolidating.
"China's industry is in a major consolidation phase because people want to rationalise their production and I think it will continue for some time to come and that should take care of the supply imbalance," he said. Turning to India where ArcelorMittal is looking to build three steel plants with a combined capacity of 30 million tonnes, Bhatnagar said he sees the country's demand outpacing supply in the medium term.
"We know that the country would need steel and we know that there's supply and demand gap after 2015, and until 2015 it will be very, very close."
ArcelorMittal expects to start building a 6-million-tonne a year steel plant in India's southern Karnataka state by 2012 after land acquisition and regulatory clearances have been secured, he said.
The planned steel plants in Karnataka and Jharkhand "are virtually at the same pace and Orissa is slightly behind because we have not yet started acquiring land there," said Bhatnagar.
The Orissa and Jharkhand facilities will each have intended capacities of 12 million tonnes, he said. Bhatnagar also said prices of iron ore, a key raw material in making steel, are likely to rise or stay at 2010 levels next year.
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