China steel demand to slip in 2011

China steel demand to slip in 2011. The growth in global steel demand will likely decelerate in 2011 as China tries to ease back on its own economic boom, according to the World Steel Association, the industry's biggest trade group. According to the WSA's forecasters, global steel consumption will grow in 2011 by 5.3%, reaching a record 1.34 billion metric tons -- enough steel to build 22,333 Empire State Buildings -- but slower than the 13.1% growth projected by the WSA for 2010. (In 2009, the global recession caused consumption to retract by 6.9%.) Chief executives and other steel dignitaries from the group are convening in Tokyo this week for the WSA's annual meeting. Panel discussions and speeches began there early Monday. In conjunction with the conference, the WSA released its 2011 steel demand projections. "Despite the better-than-expected forecast for 2010, we are still cautious. Steel demand in the developed economies in 2011 will still be well below the pre-crisis peak level," the organization said in its statement announcing the forecasts. "The recovery so far has been mainly driven by the inventory cycle and government stimulus packages whose effects are now fading out." When it comes to steel, China remains the story, and the story now is one of abating growth. Because it's the world's biggest steelmaker and most voracious steel consumer, China has more of an impact than any other variable on the price of steel globally -- and therefore the profits and share prices of steelmakers in the U.S. China has made moves to staunch the easy credit that had created a real estate and construction booms in its biggest cities. This, the WSA said, will cause nation's steel consumption to "slow down considerably in the remaining part of this year." In 2011, the deceleration in China will continue, the WSA believes. Steel consumption in the People's Republic will grow by 3.5% next year, slower than the 6.7% pace the WSA is predicting for 2010, again hemmed in by the real-estate sector but also by the "phasing out of stimulus packages." That's far less than the nearly 25% explosion in steel demand China underwent in 2009, when the rest of the planet was in full-blown recession. In its news release announcing the forecasts, the WSA strove to put the Chinese slowdown in perspective, noting that the country will nonetheless use 45% more steel in 2011 than it did in 2007. The report comes as third-quarter earnings season begins in the U.S., with U.S. Steel, AK Steel, Nucor and Steel Dynamics reporting in mid to late October. The latter three, squeezed by rising raw materials costs and a general inability to push through price hikes to customers, all issued third-quarter profit warnings last month.