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Steel will survive short gov't shutdown: exec

Keywords: Tags  Hans Jürgen Kerkhoff, German Steel Federation, steel demand, Joon-Yang Chung, Posco, World Steel Association, WorldSteel, steel demand Catherine Ngai

SAO PAULO — U.S. steel demand is unlikely to be impacted by the recent U.S. federal shutdown, provided the issue remains a short term one, according to German Steel Federation president Hans Jürgen Kerkhoff.

"In 2014, (U.S.) steel demand is expected to grow by 3 percent, aided by the improving global economy and activities in the automotive and residential construction sectors," Kerkhoff said during a press conference at the World Steel Association’s (WorldSteel’s) annual conference in Sao Paulo. "We do not expect the government shutdown to impact GDP (gross domestic product) negatively if the shutdown is confined to a few days."

The international steel body, which issued its short-term forecast Oct. 7, said that U.S. steel demand is set to grow 0.7 percent this year vs. a 2012 growth rate of 7.8 percent.

The U.S. federal government moved into its second week of shutdown after political parties failed to come to a compromise. Assuming that the overall GDP won’t be affected, there likely will be no impact to steel, Kerkhoff said, adding that there are no major political risks that would affect the U.S. market despite the government having to negotiate on raising its debt ceiling in the coming weeks.

Outside of steel growth, changes in trade flows between the United States and its partners could change in the months ahead due to a number of recent trade cases filed against imports of Asian products, including pipe and electrical steel. Imports of those products could drop off in the near term, according to Joon-Yang Chung, chief executive officer of South Korean steelmaker Posco Ltd.

"We are facing a serious situation in the industry, including anti-dumping on OCTG (oil country tubular goods) and so on," he said. "I think that Asian countries are now reducing exports to the USA to overcome problems."

WorldSteel also forecast global apparent steel use would increase 3.1 percent to 1.475 million tonnes in 2013, following 2-percent growth in 2012. Usage will increase a further 3.3 percent to 1.523 million tonnes in 2014, it added.

Much of that stability in growth is caused by a continued recovery in developed economies through 2014, although the association pointed out that China’s apparent steel use is expected to grow by 6 percent in 2013, but is forecast to slow to 3 percent in 2014.

"Risks have considerably stabilized in the developed economies but are rising in the emergent economies," Kerkhoff said. "Economic conditions remain uncertain and challenging world steel demand will continue to grow."

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