Brussels — In its April 2018 Short Range Outlook, World Steel Association (worldsteel) forecasts global steel demand will reach 1,616.1 Mt in 2018, an increase of 1.8% over 2017. In 2019, it is forecast that global steel demand will grow by 0.7% to reach 1,626.7 Mt.
Commenting on the outlook, T.V. Narendran, Chairman of the worldsteel Economics Committee said: “In the next couple of years the global economic situation is expected to remain favourable 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, possible adverse impact from rising trade tensions and the probable US and EU interest rate movements could erode this current momentum.”
Favourable global economic momentum, but rising global trade tensions
Upside and downside risks to this forecast are mostly balanced. In 2018, high confidence, strong investment levels and a recovery in commodity prices are generating a virtuous cycle for steel demand globally both in developed and developing economies. The slight deceleration in 2019 will be due to further deceleration in China and weakened investment momentum due to higher interest rates.
On the downside, possible escalation of trade tensions, rising inflationary pressure and tightening of US and EU monetary policies may cause financial market volatilities and trouble highly indebted emerging economies.
China will return to deceleration trend
In 2017, the mild government stimulus measures provided some boost to construction activity, but investment continued to decelerate and steel demand showed only a moderate increase despite the stimulus.
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 2.0% with a further slowdown in construction activity. In manufacturing, the machinery sector is expected to maintain positive growth on the back of a strong global economy while automotive and home appliances are expected to decelerate.
High corporate and local government debt continues to raise concern but a hard landing for the Chinese economy is unlikely in the short run.
The full worldsteel Short Range Outlook April 2018 can be found under worldsteel.org.
Source: World Steel Association AISBL
