Global crude steel demand is expected to continue to grow in 2019 though the world economy is widely expected to see slower growth, according to the World Steel Association, who noted that close attention should be paid to steel production and demand in India this year.
“Global steel demand will continue to grow at least 1.4% this year taking into account a slow world and Chinese economy. This is a conservative view … China could very easily grow steel use by 1-2% and if that happens this it could lead to 2% growth in global steel demand rather than 1.4%,” said Edwin Basson, General Director of the Association, adding the 1.64 billion tons of finished steel products produced last year would be not enough in itself to meet the estimated demand that we are seeing in 2019.
Last year, global crude steel output rose 4.6 percent year-on-year to 1,808.6 million tons. Chinese crude steel production stood at 928.3 million tons in 2018, up 6.6 percent from a year earlier, despite the country’s phasing out of unregulated, outdated steel mills, whose production was excluded from official data. With overall stable demand, China‘s share of global crude steel production went up from 50.3 percent in 2017 to 51.3 percent in 2018.
While there will not be surprising fluctuation in demand from China this year, India is set to have considerably more demand.
“Watch India for growth, but it will not be a second China,” Basson said. India produced 106.5 million tons of crude steel last year, jumping 4.9 percent year-on-year to overtake Japan as the world’s second largest steel producer.
India will also undoubtedly become the second largest global consumer in the near future, Basson said, but indicating the significant differences between reasons for demand growth in India and China.
“Indian steel growth will be supported by the needs of its own growing population rather than as in China by the industrial sector,” he said.
India’s use of steel per capita has grown in recent years to stand above 66 kilogram (kg), far less than the world average of more than 200 kg, though it suggests that India has a huge unrealized potential for steel demand growth.
Recently, India has been trying to implement an extensive reform agenda with an aim to remove institutional barriers and thus unleash its growth potential. The country is also making an ongoing push for infrastructure development. These measures, coupled with the favourable demographics, are improving the macroeconomic fundamentals, which lead to continued growth in steel use.
Another factor that is identified as a major driver of India’s steel demand is the continued growth of its construction sector, that is on the back of quick infrastructure development and strong housing demand, especially affordable residential housing.
The auto industry is also ready to play a big part in India’s steel consumption growth, along with the manufacturing sector that has slowly gained momentum.