During the "New Horizons in Steel Markets" 10th Annual Conference organized by SteelOrbis in Istanbul on November 19, Fatih Çıtak, marketing and sales director of Turkish steelmaker Erdemir Group, talked about the search for balance in the world economy and the steel market and made projections for 2016.
Mr. Çıtak stated that in the near term the US Federal Reserve will most probably increase interest rates, which have been at record-low levels for the last ten years, and this means that uncertainties in the world economy will decline. "We think that the world economy hit the bottom this year, and we estimate that the worst period is behind us. After experiencing the risks which had been foreseen for 2015, in 2016 we expect to see greater balance in the economy," said Mr. Çıtak. Referring to the economic growth forecasts in China, he said that China is expected to see a growth of 6.8-6.9 percent in 2015 and growth of 6.5 percent over the next five years. This growth will enable the steel industry to reach its own balance as of 2016.
About the outlook for 2016, the Erdemir official stated that, with greater balance beginning to be observed in the world economy, the uncertainties in the steel industry will be reduced also. "The world steel industry is currently characterized by a supply-demand imbalance. As a result, we have reached unsustainable levels of capacity utilization. In the coming period, we believe that 150 million metric tons of capacity will be disabled and so the average capacity utilization rate will rise to 80 percent. Assuming that the world economy will grow by around three percent within the next five years, we anticipate that global steel consumption will increase to 1.52 billion mt next year. We expect the supply-demand imbalance will also diminish. When we look at this year's top ten leading steel-consuming countries, contractions have been observed in consumption in six of the countries, while in 2016 we expect a decline in consumption only in Russia and China. Thus, we believe that, with the stabilization in the economy next year, the steel industry will begin to see a perceptual and psychological normalization," Fatih Çıtak concluded.