worldsteel forecasts increasing demand 2017/18 by up to 3.0 percent

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Steel demand 2017/2018 (Source: worldsteel)

Brussels — The World Steel Association (worldsteel) today released its October 2017 Short Range Outlook. worldsteel forecasts global steel demand will reach 1,622.1 Mt in 2017. In 2018, it is forecast that global steel demand will reach 1,648.1 Mt. worldsteel forecasts that global steel demand excluding China will reach 856.4 Mt, an increase of 2.6 percent in 2017 and 882.4 Mt, an increase of 3.0 percent in 2018.

Commenting on the outlook, Mr T.V. Narendran, Chairman of the worldsteel Economics Committee said, “progress in the global steel market this year to date has been encouraging. We have seen the cyclical upturn broadening and firming throughout the year, leading to better than expected performances for both developed and developing economies, although the MENA region and Turkey have been an exception.

„The risks to the global economy that we referred to in our April 2017 outlook, such as rising populism/protectionism, US policy shifts, EU election uncertainties and China deceleration, although remaining, have to some extent abated. This leads us to conclude that we now see the best balance of risks since the 2008 economic crisis. However, escalating geopolitical tension in the Korean peninsula, China’s debt problem and rising protectionism in many locations continue to remain risk factors. In 2018, we expect global growth to moderate, mainly due to slower growth in China, while in the rest of the world, steel demand will continue to maintain its current momentum.

„So, world steel demand is recovering well, driven largely by cyclical factors rather than structural. The lack of a strong growth engine to replace China and a long term decline in steel intensity due to technological and environmental factors will continue to weigh on steel demand in the future.”

China’s steel demand for 2017 will be 3 percent

China closed most of its outdated induction furnaces in 2017, a category which was generally not captured in official statistics. With closure of the induction furnaces, the demand from this sector of the market is now satisfied by mainstream steel makers and therefore captured in the official statistics in 2017. Consequently, the nominal growth rate for steel demand in China increased to 12.4 percent or 765.7 Mt. Disregarding this statistical base effect worldsteel expects that the underlying growth rate of China’s steel demand for 2017 will be 3 percent, which will make the corresponding global growth rate 2.8 percent.

Steel demand growth in the short term

Both advanced and developing economies are exhibiting stronger economic momentum this year. Confidence and investment sentiments are improving in a large part of the world despite some financial market volatility and growing concern of stock market overvaluation.

Also on a positive note, global trade is gaining momentum despite worries about rising protectionism and talks of rearranging existing free trade agreements.

Developed economies gain strong foothold for recovery

The US economy continues to exhibit robust fundamentals supported by strong consumer spending and rising business confidence. Concern about tensions within the EU particularly over migration policies is receding and the EU economic recovery is broadening. Japanese steel demand is showing better than expected performance benefitting from the government stimulus package, improving exports and preparations for the 2020 Olympic games. South Korea’s steel demand is suffering from high consumer debts, weakening construction and a depressed shipbuilding sector, while escalated tension around the North Korean nuclear weapons threat poses a serious and highly unpredictable risk.

With these generally favourable developments steel demand in the developed economies is expected to increase by 2.3 percent in 2017 and 0.9 percent in 2018.

The full report can be downloaded under worldsteel.org.

Source: World Steel Association (worldsteel)