Following the announcement at its 52nd annual meeting held in Tokyo on October 16-17 of worldsteel’s short-range outlook (SRO) for global steel demand, Saeed Al Remeithi, CEO of Emirates Steel and chairman of the worldsteel economics committee, gave a presentation covering the background to the outlook, giving an overview of the outlook report, while also summarizing and giving his conclusions.
Mr. Al Remeithi began by stating that global economic growth is peaking, having maintained a strong momentum through 2018, while it now seems to be plateauing. Developed countries are expected to slow down in 2019, while the outlooks for emerging economies are mixed, he said, adding that downward pressures are building up. In addition, he enumerated uncertainties, including rising trade tensions (with various negative scenarios possible in the event of a trade war), normalization of monetary policies in the EU and US, geopolitical tensions (Brexit, elections, sanctions, populism), the deceleration of the Chinese economy and the increasing risk of a financial crisis.
As regards investment, the worldsteel economics committee chairman said that growth momentum is expected to be maintained, with investment in emerging economies expected to strengthen, while at the same time he remarked that China will have a diminishing contribution to global investment growth and also that investment in developed countries has peaked.
Regarding the worldsteel short-range outlook for global steel demand, the Emirates steel chairman indicated that a deceleration in steel demand is foreseen in 2019 as compared to 2018, with this global slowdown mostly based on the anticipated slowdown in China. He pointed out that Chinese steel demand was stronger than expected in 2018 due to the Chinese government’s mini-stimulus in real estate despite a deceleration in infrastructure. In 2019, he said, rebalancing efforts and environmental concerns are likely to suppress steel demand in China, while infrastructure investment is expected to provide some support. In Japan, steel demand is expected to remain stable despite the sluggishness of construction. Turning to the Americas, he remarked that steel demand in Mexico has been negatively impacted by the NAFTA negotiations, while going on to say that construction activity has been struggling in Brazil, also due to the impact of elections, though steel demand in Brazil is expected to improve in 2019. In the EU, business confidence remains high though there has been some slowdown in the EU automotive sector, due to the saturation effect. Uncertainties in the region include Brexit and the rise in populism and nationalism.
Referring to major changes in the landscape of the global steel industry over the past 10 years since the outbreak of the financial crisis, Mr. Al Remeithi pointed out that an increasing gap has appeared between China and the US as the world’s largest and second-largest producers of steel, respectively, while India is now in third places and has nearly closed the gap on the US.
In conclusion, Mr. Al Remeithi warned that current risks are skewed towards the downside, while he also referred to the fact that steel intensity is falling despite stable investment growth, adding that this could be a long-term trend.