steel - Global Steel Demand Hiked, Yet Faced With Risks

The World Steel Association (Worldsteel) lift its forecasts on global steel demand growth for this year and next, but said that the escalating trade tensions were casting a shadow over the outlook for the sector.

The association expects global demand for finished steel to rise by 3.9 percent this year to 1.658 billion tonnes driven by China’s big appetite and to undergo a slower 1.4 percent year-on-year growth to reach 1.681 billion tonnes in 2019, according to its latest short-range outlook for the global steel market for 2018-2019 released on October 16.

Worldsteel gave an prediction back in April that 2018 demand would climb 1.8 percent from last year to 1.616 billion tonnes, while forecasting a 0.7 percent growth for next year to 1.616 billion tonnes.

“For 2018 and 2019 global steel demand remains healthy but faces increased challenges,” said Saeed Al Remeithi, head of the body’s economics committee and CEO of Emirates Steel. “Trade friction is making for an uncertain business environment,” he warned, adding that the weakening steel demand from China will affect global steel demand.

The steel industry, with a value evaluated at about $900 billion a year, is regarded as a gauge of global economic health.

China’s Appetite

Steel consumption in China is expected to grow 6 percent this year to 781 million tonnes and be flat in 2019, Worldsteel said.

In the first half of 2018, China’s steel demand got a boost from the boom in real estate and the strong global economy. However, continuous government efforts to rebalance the economy and tightening environmental regulations will lead to a slowdown in steel demand toward the end of 2018 and 2019.

“China steel demand-growth is expected to decelerate in the absence of stimulus measures,” the association said.

Read Also: Special Notes of China Steel Demand in 2018

CRU, a Beijing-based consultancy estimates that China, which produces and consumes half the world’s steel, could suffer a drop up to 1% in gross domestic product growth if its trade conflicts with U.S abate investor confidence.

With countries including Germany cutting economic growth estimate and bearish sentiment increasing, “that will impact intentions on investment and will eventually lead to some downside risk for steel demand,” said a CRU analyst.

But the analyst said there was unlikely to be a sharp decline in China’s steel demand since Chinese government was trying to keep steady and sustainable growth in the economy.

China has been phasing out excess and outdated steel capacity, including more than 100 million tonnes of illegal induction furnaces in 2017, with an aim to slim its corpulent steel sector.

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