HomeNewsGlobal steel volatility increases as govt delays Zisco revival

Global steel volatility increases as govt delays Zisco revival

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As government dithers reviving its steel unit, global demand is seen hitting a record 1,34 billion tonnes next year, which could possibly stoke global steel prices, hurting all net importers including Zimbabwe.

During its annual conference in Tokyo yesterday, the World Steel Association noted the current volatility in the price of iron ore and coal – key raw materials for the production of steel – could increase next year as a result of a quarterly pricing system introduced early this year.

Government in August opened a fresh expression of interest for Ziscosteel – the largest steel producer in Zimbabwe – saying it was not comfortable with multinationals partnering its ailing steelmaking operation, currently reeling under Western sanctions.

Estimates put the parastatal’s recapitalisation costs at about $240 million or more.

But Cabinet in May threw out bids by India’s Jindal Steel and Power and ArcelorMittal South Africa, which were favoured to buy as much as 60% of Zisco in which government controls an 80% equity interest, prolonging the country’s dependence on imports and aggravating is exposure to global market volatility.

According to the World Steel Association, global steel demand could hit a record 1,34 billion tonnes next year, potentially bidding up the price of the commodity, which may be worsened by unstable iron ore and coal prices.

“There is no doubt a very short-term volatility in steel prices coming from raw material prices gives us and customers some issues,” World Steel Association director general Ian Christmas said.

China is expected to account to as much as 45% of global steel demand next year, followed by the United States and India is seen emerging as the world’s third-biggest steel consumer for the first time.

The global steel body sees this happening despite the country’s efforts to control steel production with the aim of cooling the real estate sector, which could reduce demand to 3,5% next year from about 6,7% next year.

The association’s chairman Paolo Rocca said he expected steel demand in the developed world to sag 25% below the 2007 demand level and China’s to peak 42% above its consumption level three years ago.

However, the rate of growth in global steel demand is expected to slow to 5,3% next year from a revised 13,1% or 1,27 billion tonnes this year.

The rate of growth in demand has been adjusted upwards from 8,4% because Europe and other developed countries are restocking with the aid of government stimulus packages.

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