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Engineer Saeed Ghumran Al Remeithi

Global steel demand to increase by 1.3pc in 2019

MADRID, April 17, 2019

The global steel demand will reach 1,735 million tonnes (mt) in 2019, an increase of 1.3 per cent over 2018, according to a report by World Steel Association (worldsteel), the international trade body for the iron and steel industry.

Worldsteel, headed by Engineer Saeed Ghumran Al Remeithi, chief executive officer of Emirates Steel and chairman of the worldsteel Economic Committee, released its Short Range Outlook (SRO), following its bi-annual meeting in Madrid, Spain.

In 2020, it forecasts global steel demand growing by 0.9 per cent to reach 1,752 mt.

Engineer Al Remeithi said: “In 2019 and 2020, global steel demand is expected to continue to grow, but growth rates will moderate in tandem with a slowing global economy. Uncertainty over the trade environment and volatility in the financial markets has not yet subsided and could pose downside risks to this forecast.

“In 2018, global steel demand increased by 2.1 per cent, after adjusting for China’s induction furnace closures, growing slightly slower than in 2017. In 2019 and 2020 growth is still expected, but in a less favourable economic environment,” he said.

“China’s deceleration, a slowing global economy, and uncertainty surrounding trade policies and the political situation in many regions suggest a possible moderation in business confidence and investment,” he added.

Engineer Al Remeithi continued: “In the Middle East region, steel demand is expected to contract by -2.6 per cent to 48.9 mt in 2019, with a minor recovery forecasted in 2020 with demand expected to reach 49.5 mt, a growth of 1.2 per cent.”

“Economic diversification efforts in the GCC continue but fiscal consolidation is still suppressing construction activities, however, in North Africa the situation looks brighter with Egypt recovering strongly after the structural reforms of 2017,” he concluded.

The global steel demand trends and highlights for 2019 and 2020:

China: Chinese steel demand continues to decelerate as the combined effect of economic rebalancing and trade tension is leading to slowing investment and sluggish manufacturing performance. Mild government stimulus cushioned the economic slowdown in 2018. In 2019, the government is likely to heighten the level of stimulus, which is expected to boost steel demand. In 2020, a minor contraction in Chinese steel demand is forecasted as the stimulus effects are expected to subside.

US: Steel demand in the developed economies grew by 1.8 per cent in 2018 following a resilient 3.1 per cent growth in 2017. Demand is expected to further decelerate to 0.3 per cent in 2019 and 0.7 per cent in 2020, reflecting a deteriorating trade environment.

In 2019, the US growth pattern is expected to slow with the waning effect of fiscal stimulus and monetary policy normalisation. Therefore, both construction and manufacturing growth will moderate. Investment in oil and gas exploration is expected to decelerate as well, while a boost in infrastructure spending is not expected.

European Union: The European Union (EU) economies are also facing a deteriorating trade environment as well as uncertainty over Brexit. Slower growth in demand for steel is expected in the major EU economies, especially in those more export dependent, in 2019. Steel demand growth is expected to improve in 2020, dependent on a reduction in trade tensions.

Japan and Korea: Japan recorded growth in steel demand in 2018, supported by a favourable investment environment and continued construction activities as well as a boost in consumer spending prior to the consumption tax increase. In 2019 and 2020, steel demand is likely to contract slightly due to a moderation of construction activities and decelerating exports despite the support provided by public projects.

Steel demand in Korea has been contracting since 2017 due to reduced demand from two major steel using sectors, shipbuilding and automotive. Steel demand is expected to continue declining in 2019 due to toughened real estate market measures and a deteriorating export environment. A mild recovery is expected in 2020.

Asia: Steel demand in the emerging economies, excluding China, is expected to grow by 2.9 per cent and 4.6 per cent in 2019 and 2020 respectively, and steel demand in developing Asia, again excluding China, is expected to grow by 6.5 per cent and 6.4 per cent in 2019 and 2020 respectively, making it the fastest growing region in the global steel industry.

In India, having overcome the shocks of demonetization and the goods and services tax (GST) implementation, the economy is now expected to achieve faster growth starting in the second half of 2019 after the election. While the fiscal deficit might weigh on public investment to an extent, the wide range of continuing infrastructure projects is likely to support growth in steel demand above 7 per cent in both 2019 and 2020.  

In the Association of South East Asian Nations (Asean) region, infrastructure development continues to support demand for steel.

Turkey and Russia: With improved oil prices, growth in steel demand in Russia will continue but is expected to be constrained by structural issues.

The Turkish economy is still reacting to the currency crisis of August 2018, which led to contraction in steel demand. This is expected to continue into 2019, with some stabilisation in 2020.

Latin America: A broad recovery in steel demand across Latin America is expected to continue despite internal and external uncertainty. Recovery in Brazil is in its third year with the construction sector expected to mildly improve in 2019. On the other hand, steel demand growth in Mexico will be moderate, influenced by weak mining investment, fiscal budget constraints, policy uncertainties and a slowing US economy. The political situation in Venezuela and its impact on the region is unclear, it stated. – TradeArabia News Service




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