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China, India, Turkey to lead steel growth

Keywords: Tags  steel, Steel Success Strategies, Jayant Acharya, JSW Steel, Robert Stall, Ernst & Young, Ugur Dalbeler, Colakoglu Metalurji Catherine Ngai

NEW YORK — While sluggish growth, oversupplied markets and weak demand continue to plague the U.S. steel industry, nations such as India and Turkey will continue to remain strong, according to several executives and consultants at the Steel Success Strategies XXVIII conference in New York sponsored by AMM and Englewood Cliffs, N.J.-based World Steel Dynamics Inc.

"The Indian growth story was founded on a structure of (moving from) farm to non-farm (industries) ... and the next phase of growth in India is for infrastructure, manufacturing and urbanization," said Jayant Acharya, director of commercial and marketing at Mumbai, India-based JSW Steel Ltd. "India is the second-most populous country in the world, and 50 percent of the population is less than 24 years old, which means it’s likely to add 10 million people into the (work) force per annum for the next 15 years."

As the fourth-largest steelmaking country in the world, according to World Steel Association data, India likely will see its demand for steel increase in coming years as a result of increasing infrastructure and construction spending, particularly as the government has said it wants to boost the manufacturing sector’s share of the nation’s gross domestic product to 25 percent by 2025 from 15 percent currently, he said.

China, which has seen a pullback in its economy in recent years due to a shift from an asset-intensive investment model to a consumption model, may continue to grow. But that would require fundamental changes, including the consolidation of its steel industry as well as a move away from commodity markets, said Robert Stall, a principal at London-based Ernst & Young LLC.

"If China continues to play a prominent role in the global export market, will they be able to provide goods and services on the niche end instead of providing core products that countries use to build and develop themselves?" Stall asked. "For the industry to gain meaningful long-term financial health, the capacity utilization rate has to go up. And as you work your way to the 10,000-pound gorilla, there’s no question that the industry has to deal with global overcapacity. This issue is not going to go away."

Turkey likely will see steel consumption increase on the back of growing exports, according to Ugur Dalbeler, managing director of Istanbul steelmaker Colakoglu Metalurji AS and chairman of the International Rebar Exporters and Producers Association.

"Manufacturing is showing tremendous growth," he said. "During the downturn in 2009 ... we were severely affected. Unfortunately, our government has not introduced any stimulus packages or bailed out the major steel-consuming industry, but thanks to our exporting abilities it’s given a good basis for the Turkish steel industry to grow."

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