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The World Steel Association (WSA) lowered its 2012 global steel forecast some 3.5% from the previous early 4Q forecast due to a combination of 1.7% weaker actual consumption for 2011, a 4% decline in the Euro-zone consumption forecast and a 4.8% decline in the Chinese consumption forecast.

The WSA identified two main reasons for the forecast cut, citing the negative global impact from the Euro-zone debt crisis and the continuing slowdown in Chinese steel demand.  While WSA expects a recovery in second half demand, the association warned of some downside risk from a worsening of the European problems, the impact of high oil prices or geopolitical tension in oil producing regions and the possibility of a hard landing in China.

The WSA is forecasting steel demand growth in all regions for 2013, with overall growth of 4.5%.

Our full report provides our thoughts on the World Steel Association’s steel consumption forecast for 2012 and 2013 well as the implications for steel equities.

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