Japan's largest steel producer, Nippon Steel, told analysts at
a meeting this week of six key trends it believes will define
its business environment this year.
Steel demand will grow, especially in emerging countries. The
Japanese company expects global consumption in 2012 to reach
1.42 billion tonnes, an increase of 49.1 million tonnes - or
3.6% - over 2011.
At the high end
Demand for niche products will probably rise faster than ,
noting that new car sales in the USA are projected to rise by
1.5 million units to 14.3 million units, for example.
Poor growth at home
Demand in Japan will stay flat, with auto demand remaining
healthy and some support from reconstruction in the north of
the country. The Japan Iron & Steel Federation has pointed
to shipbuilding as major source of weakness this year, with
demand projected to drop 15-20% in the fiscal year to March
Nippon Steel warned that Japanese inventory levels would remain
high. But it also pointed out that they have been on a gradual
decline, with flat steel stockpile volumes falling from 4.32
million tonnes in December to 4.14 million tonnes by the end of
Asian oversupply...or not
Nippon Steel also believes that increasing steel supply in East
Asia will have a gradually diminishing effect over the coming
years as demand increases to soak up excess supply.
Finally, it said that raw material costs would remain
"stratospheric", with no signs of any downward trend.
Nippon Steel did not say how these trends would affect the
company's earnings, noting that ongoing price negotiations with
both customers and raw material suppliers have made it almost
impossible to make an accurate forecast.