<article><p class="lead">Worldsteel's forecast of 1.4pc growth in global steel demand this year could prove conservative, depending on what happens in China, acording to director-general Edwin Basson.</p><p>The association assumes there will be no growth in Chinese steel demand this year, with Beijing comfortable allowing GDP growth to drop to 5.6-6.0pc, and no steel stimulus measures in sight. China's economic planning system is of the "firm opinion" that the country does not need more steel than it currently produces, Basson added.</p><p>Any infrastructure investment announced this year to stimulate economic growth is likely to be away from residential construction in tier-2 and 3 cities — the primary locus of previous stimulus — and to focus on China's less developed western regions. </p><p>Should such measures materialise, pushing Chinese internal steel demand from last year's 780mn t, then exports could fall further to ensure domestic requirements are met. China produced 928mn t of crude steel last year, or around 853mn t on a finished steel basis, leaving 50mn-70mn t available for export.</p><h2>No quick switch</h2><p class="lead">Worldsteel does not expect an overnight move from blast furnace to electric arc furnace (EAF) production for three main reasons. Firstly, it is expensive to move from a basic oxygen furnace to an EAF. Secondly, in Europe — where producers have said they want to move to hydrogen-based production or other technologies — the cost of energy is uncompetitive compared with other regions, such as the US. And thirdly, any move to the EAF route requires a continuous and competitive supply of scrap. In Europe, initiatives such as the circular economy could prolong the life of steel in use, reducing scrap flows.</p><p>In 2015-17, the steel industry has been operating within the UN's two-degree global warming scenario, which it is hoped will avert the worst consequences of climate change. </p><p>If the whole steel industry can perform at the same level as the best 15pc of performers, Worldsteel believes the industry can continue to operate within the two-degree scenario for a further decade or more. This would allow steelmakers to perfect and commercialise breakthrough technologies, such as hydrogen-based production.</p><p>Even in 2040, Worldsteel expects that 1bn t of blast furnace-based steel output will still be required to meet global requirements. While blast furnace-based output might be concentrated in certain areas, Basson does not expect any output cut in developed markets. Politically, there is now a real desire to have steelmaking capabilities, he said. </p></article>
