Steel production is a basic building block of a country's or region's economy. The International Monetary Fund (IMF) recently announced revised global economic growth projections as well as growth for regions and specific countries. These revisions will likely impact steel demand and revenues of steelmakers.

The World Steel Association has indicated that global steel demand will increase 2.9 percent to 1,454 million tons this year, which is up substantially from growth of steel demand of 1.2 percent last year.

As I've indicated here at Seeking Alpha, the increase in steel demand is increasingly about China. This year, China's demand for steel, an estimated 669 million tons, corresponds to 46 percent of the world's steel demand, although China's steel production in January and February comprised 50 percent of global production.

Impact of Economic Growth and Steel Demand on U.S. Steelmakers

The International Monetary Fund revised its growth projections for the U.S. economy, and indicated that America's economy will grow 1.9 percent this year.

The World Steel Association indicated that U.S. demand for steel increased 8.4 percent in 2012. This was primarily due to demand from the automotive and energy sectors and an increasingly resilient construction recovery. The demand for steel in the U.S. is expected to increase 2.7 percent this year to 99.3 million tons, and increase 2.9 percent to 100 million tons next year.

I've discussed in detail here at Seeking Alpha three U.S. steelmakers, U.S. Steel ( X ), Nucor Corp. ( NUE ) and AK Steel Holding Corp. ( AKS ), as well as the global steelmaker ArcelorMittal ( MT ), which has extensive U.S. operations.

It's a positive indicator for U.S. steelmakers that American demand for steel is projected to grow at a rate in excess of the rate that America's economy will grow. To a large extent this increase in steel demand is due to increased construction activity and auto production in the United States.

• U.S. Steel closed today at $16.18, toward the lower end of its 52-week range of $15.80 to $29.25. There is no P/E since the company is not profitable, but the company's forward P/E for 2014 is 7.7.
• Nucor Corp. closed today at $42.30. Its 52-week range is $34.23 to $48.60. The company's P/E is 30.65, which to me is very aggressive for an American steel producer.
• AK Steel Holding Corp. closed today at $2.93. It's trading near the bottom of its 52-week range of $2.76 to $7.71. There is no P/E since the company is not profitable, but the company's forward P/E for 2014 is 6.23.

While I'm not bullish on U.S. steelmakers as a group, due primarily to low growth prospects for the U.S. economy, of these three companies I like Nucor the best.

Impact of Economic Growth and Steel Demand on European Steelmakers

The International Monetary Fund decreased its growth projections for the eurozone to a negative growth rate, and a decrease of .3 percent. The IMF projected that Germany, the eurozone's strongest economy would grow .6% this year, and that France would grow at a .1 percent rate.

The European Union countries saw a 9.3 percent decline in steel demand last year, as the euro crisis weighed heavily on economic activities throughout the region. Steel demand in Europe is expected to shrink a further .5 percent this year.

I've indicated here at Seeking Alpha that production overcapacity of Europe's steel industry and the difficulty that steelmakers have had in decreasing capacity has been a major problem. This has severely impacted ArcelorMittal, a company I've written about extensively here at Seeking Alpha.

ArcelorMittal closed today at $11.79, near the low-end of its 52-week range of $11.66 to $11.92. There is no P/E due to the company's lack of profitability, but the company's P/E for 2014 is 8.61 .

Impact of Economic Growth and Steel Demand on China's Steelmakers

The International Monetary Fund is projecting that China's economy will grow at an 8 percent rate this year.

China's percentage of total world steel production increased from 47% to 50% from January to February, accounting for half of the total of monthly global production, while the U.S. ranked fourth at 5%.

China's share of total world steel production is larger than the combined production of the U.S., the 27 European Union countries, Russia, and Japan.

The World Steel Association projected that Chinese steel demand for 2014 will increase by 2.5 percent to 686 million tons, which will result in global steel demand to increase to 1,500 million tons.

I've written about Chinese steel producers here at Seeking Alpha. I'm bullish on Chinese steelmakers due to China representing half of the global steel industry, the country's anticipated growth rate of 8 percent for this year and the increasing demand for steel in China.

Some of the Chinese steelmakers that I've written about include:

• China Industrial Steel ( CDNN.OB ), which closed today at $.44, at the low of its 52-week range of $.40 to $1.20. The company's P/E is 5.43.
• Sutor Technology Group ( SUTR ) closed today at $1.56, Its 52-week range is $.65 to $2.53. The company's P/E is 5.78.
• China Gerui Advanced Materials Group ( CHOP ), which closed today at $1.70. Its 52-week range is $1.06 to $3.04. The company's P/E is 3.81.

A Bloomberg survey indicated that it's likely that China's steel consumption will rise 4.6 percent to 708.8 million metric tons this year. This rate of increased consumption is greater than that of last year, when demand grew by slightly under 3 percent to almost 678 million tons.

This increased consumption is to a large extent due to the country's spending on railroad construction and higher automobile sales.

China is expected to spend $105 billion, the most in three years on railroad construction. China is planning on having 75,000 miles of track in operation by 2015.

Chinese demand for steel is also being positively impacted by the country's auto industry. The China Association of Automobile Manufacturers has announced that passenger-vehicle sales rose 20 percent to 2.84 million units in January and February, compared with the first two months of 2012. The association also indicated that the country's automobile production increased 10.88 percent in March, to 2,085,200 units, an increase of 54.76 percent compared with March of last year.

Confirming the increase in demand for steel, Baosteel Group Corp., the parent company of China's third-largest steelmaker, Baoshan Iron & Steel Co. Ltd. ( 600019:CH ) has indicated that it is anticipating an increase in Chinese steel demand this year.

The statement by Baosteel confirms that the growth in Chinese steel demand, is on a rebound, from a four-year low. This is positive factor that is likely to be positive for earnings of both the country's steelmakers and iron ore producers.

Baosteel produces carbon steel, stainless steel and specialty steel products. The company's net income for 2012 increased 40 percent to $1.66 billion.

Baoshan's shares don't trade in the U.S., but the announcement by Baosteel's General Manager, and Baoshan's chairman, He Wenbo, is a positive indicator for Chinese steelmakers that do have shares trading in the United States.

On March 8, Baoshan announced that it had raised prices of both its hot-rolled and cold-rolled steel products to the highest price since June of last year. This announcement also is positive for all of China's steelmakers, including those with shares that trade in the U.S.

Conclusion

The low economic growth rate in the U.S., and the negative growth rate in the eurozone are bearish indicators as to the prospects for the two regions' steelmakers.

With China accounting for 50 percent of global steel production, and with China's economy projected to grow around 8 percent this year, I'm bullish on the country's steelmakers

[bold emphasis re Bao-CWRN's buyer-is added]