At the SteelOrbis 2018 Fall Conference & 79th IREPAS Meeting held in Istanbul on September 16-18, Jose Angel Rey, international commercial director of Spanish steel producer CELSA Group, said that in July this year the IMF reconfirmed the growth rate forecast for the global economy at 3.9 percent for both 2018 and 2019, the same as the growth forecast in January 2018, while keeping the forecast growth rate for emerging markets and developing economies at 4.9 percent for 2018, while revising it upwards to 5.1 percent for 2019.
According to the CELSA official, world steel demand is expected to grow by 1.8 percent in 2018 to reach 1.61 million mt, up from the previous estimation made in fall last year of 1.55 million mt, with another 0.7 percent growth expected in 2019. He went on to say that global crude steel production increased by five percent in the January-July period of 2018, with the main engine being China with a six percent growth rate. Global steelmaking capacity has decreased for the second consecutive year because of the deceleration seen since 2013.
Regarding China which represents 50 percent of the rebar market, Mr. Rey said that the share of steel manufacturing capacity using electric arc furnaces (EAFs) in the country had already risen to nine percent in 2017 from six percent in 2006. The Chinese government has set a target of achieving 20 percent steel production through the EAF route by 2020. Mr. Rey pointed out that, on account of this structural change, graphite electrode requirements are expected to increase by 218,000 mt per year by 2020.
Global long products consumption in the first half of this year amounted to 409 million mt, up 2.2 percent compared to the same period of 2017. Mr. Rey said that, if this trend continues, global long products consumption in 2018 will be in line with the historical record figure of 836 million mt registered in 2014. He added that the prospects for long steel products are similar to those mentioned at the last IREPAS meeting held in Warsaw, with the exception of merchant bars, which have a clearly lower expected growth rate for the current year.
In the first half of this year, global rebar consumption increased by 3.9 percent, with a growth rate of 5.3 percent in the CIS and Turkey. The CELSA official advised that having a reasonably balanced regional supply and demand should remain a priority for rebar producers, adding that the rebar trade is to become a more regional business due to a better balance of rebar demand and production and also due to increasing protectionist barriers.
In conclusion, Mr. Rey mentioned key risks to be considered, indicating that Chinese domestic rebar demand is a key factor for the profitability of global rebar production. He also said that general geopolitical tensions can unexpectedly darken the brilliant prospects for global growth, while the domino effect of protectionist measures can limit international commerce and contribute to a cooling down of worldwide GDP growth.