According to its short range outlook released in April, the World Steel Association (worldsteel) has forecast that global steel demand will rise by 1.8 percent in the current year to 1.61 billion metric tons, while predicting a further rise of 0.7 percent to 1.63 billion metric tons in 2019, both year on year.
Commenting on the outlook, Mr T.V. Narendran, chairman of the worldsteel Economics Committee, said, “In the next couple of years the global economic situation is expected to remain favorable with high confidence and strengthening recovery of investment levels in advanced economies. Benefitting from this, steel demand in both developed and developing economies is expected to show sustained growth momentum with risks relatively limited. However, a possible adverse impact from rising trade tensions and the probable US and EU interest rate movements could erode this current momentum.”
China to return to decelerating trend
Regarding China, the worldsteel short range outlook noted that in 2018 and 2019 GDP growth is expected to decelerate mildly, but as the government continues to focus on shifting the growth driver toward consumption, investment is likely to further decelerate. Steel demand in 2018 is expected to stay flat. In 2019, it is expected to contract by two percent with a further slowdown in construction activity.
Developed economies’ outlook remains robust
Steel demand in the developed world is expected to increase by 1.8 percent in 2018 and decelerate to 1.1 percent in 2019. The outlook for steel demand in the US remains robust on the back of the strong economic fundamentals. Though the recent tax reform is further expected to boost steel demand through its positive impact on investment, there is some concern over a possible overheating of the economy. The announced infrastructure plan is unlikely to affect steel demand in the short term. On the other hand, the EU economy has developed strong momentum with a broadening recovery across countries. Steel demand will be supported by a pickup in non-residential construction and strong manufacturing activities.
Worldsteel indicated that an expected monetary tightening in the US and the EU is responsible for the forecasted deceleration of steel demand growth in 2019.
Developing economies ride recovery momentum, yet to gain further strength
Steel demand in emerging and developing economies (excluding China) is expected to increase by 4.9 percent and 4.5 percent in 2018 and 2019 respectively, according to worldsteel.
Recovery in oil and commodity prices has improved the outlook for MENA countries. The mild recovery in Russia and Brazil is expected to continue. In other Latin American countries, recovery is also underway and growth in the region could accelerate if reforms are implemented, but the forthcoming elections lead to uncertainty.
Turkish steel demand showed strength in 2017, backed by supportive government measures. While slightly decelerating due to subsiding special economic stimulus, steel demand in Turkey is expected to show stable growth in 2018-19.
Steel demand in ASEAN-5 countries dipped in 2017 due to slow construction activity and destocking. In 2018-19, however, steel demand is expected to regain its growth momentum backed by infrastructure investment.