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Geneva - Global steel demand will fall as much as 15% this year, though there are signs of resumed appetite in China, the UN trade and development agency UNCTAD said on Friday.
"The steel industry is facing its worst demand downturn since the oil crisis of 1974-1975," an UNCTAD report, The Iron Ore Market 2008-2010, said.
"A current oversupply situation, in which falling steel production is occurring as iron ore production capacity increases, will not go away soon."
Demand for steel from auto and appliance makers has fallen sharply in line with the global slowdown, and the most widely traded steel products, like hot-rolled coil and billet, have also slowed.
The biggest steel producing countries include Australia, Brazil, South Africa and India, along with China, which alone produced 366 million tonnes last year, according to UNCTAD.
China is also the world's largest iron ore importer, having purchased 444 million tonnes last year, a 16% import increase over 2007. Its imports are closely watched for signs of revival of the world economy.
Earlier this week, ArcelorMittal, the world's largest steelmaker, said recovery in world demand was largely dependent on emerging markets such as China and Brazil, where growth has already begun to rebound.
And Brazilian iron ore miner Vale said on Wednesday that demand from steel mills has begun to improve from its late-2008 low.
UNCTAD's report, released in Geneva, concluded that this year would be a difficult one for the iron ore sector.
"In 2009, world steel demand is expected to fall by as much as 15%, although there are signs of resumed demand growth in China," the Geneva-based agency said.
- Reuters
