Global demand for steel has bottomed out and will re­bound next year in the US, Europe and Japan, the World Steel Association said yesterday.

The association said there would be a smaller decline in global demand this year than initially expected, largely owing to the rapid recovery in China in recent months, with steel use likely to fall 8.6 per cent rather than the 14.1 per cent forecast.

With steel mills in developed countries beginning to restart some of their idle capacity on signs of stronger demand and an end to de-stocking by customers, global steel demand is forecast to rise by 9.2 per cent next year, taking it back to 2008 levels.

“The global recovery is stronger than we expected in April,” said Daniel Nove­gil, head of the group's forecasting committee. “Global steel demand will return to growth in 2010, even though this will be moderate.”

The WSA's figures underline the dominant role that China has come to play in the steel industry. From 14.7 per cent in 1998, China is expected this year to account for 47.7 per cent of global demand.

On the back of the government's aggressive stimulus programme, Chinese demand is forecast to increase 18.8 per cent this year to reach 526m tonnes.

Construction and infrastructure projects have been the main sources of demand. China has also seen rising sales of cars and consumer goods such as refrigerators. Without Chinese demand, the global market would have declined 24.4 per cent this year, the WSA said.

India had also proved to be a resilient market during the crisis, with demand expected to grow 8.9 per cent this year and 12.1 per cent next year.

The outlook for the Chinese market proved to be the most controversial topic at the WSA's annual conference in Beijing yesterday. Lakshmi Mittal, chief executive of ArcelorMittal, said he was “surprised” by the forecast of a 5 per cent increase in demand for China next year – a figure provided by the Chinese Iron and Steel Association (CISA), which was well below most estimates for the performance of the Chinese economy next year.

Some industry executives privately suggested China might be understating the likely expansion ahead of highly contested talks with mining groups about the price of iron ore for next year.

Wu Xichun, honorary chairman of CISA, said the 2010 figure was the result of concerns about overcapacity in the industry and the withdrawal of some of the government's stimulus measures.

Mr Wu also hit back at comments from a number of steel executives that the huge expansion in capacity in China would result in a flood of exports. China had exported less than 4 per cent of its production so far this year, he said. “Our steel production is nearly all being consumed in China, so what are you all afraid of?” he told the conference.