The World Steel Association (worldsteel) released its April 2019 Short Range Outlook (SRO). worldsteel predicts that global steel demand will reach 1,735 Mt in 2019, an increase of 1.3% over 2018. In 2020, demand is projected to increase by 1.0% to reach 1,752 Mt.
In 2018, global steel demand rose by 2.1%, growing slightly slower than in 2017. In 2019 and 2020 growth is still expected, but in a less favourable economic environment. China’s deceleration, a troubled global economy, and uncertainty regarding trade policies, along with the political situation in many regions suggest a possible moderation in business confidence and investment.
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The report says that Chinese steel demand will continue to decelerate as the combined effect of economic rebalancing and trade tension is slowing investment and leads to sluggish manufacturing performance. Moreover, mild government stimulus cushioned the economic slowdown in 2018. In 2019, the government might increase the level of stimulus, which is expected to advance steel demand.
What is more, in 2020, a minor contraction in Chinese steel demand could take place as the stimulus effects are expected to subside.
Steel demand
Steel demand in the developed economies increased by 1.8% in 2018 after a resilient 3.1% growth in 2017. worldsteel expects demand to decelerate to 0.3% in 2019 and 0.7% in 2020, representing a deteriorating trade environment.
In 2019, the US growth pattern is expected to slow with the waning effect of fiscal stimulus and a monetary policy normalisation. As a result, both construction and manufacturing growth could moderate. Investment in oil and gas exploration is expected to decelerate also, with a boost in infrastructure spending being unlikely.
The EU economies also experience the deteriorating trade environment and uncertainty surrounding Brexit.
We expect slower growth in demand for steel 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
worldsteel said.
Japan grew steel demand in 2018, driven by a favourable investment environment and continued construction activities as well as an advancement in consumer spending before the consumption tax increase. In 2019 and 2020, steel demand will contract slightly because of a moderation of construction activities and decelerating exports despite the support provided by public projects.
Furthermore, steel demand in Korea has been contracting since 2017 due to reduced demand from two major steel using sectors, shipbuilding and automotive. Steel demand will probably continue declining in 2019 because of stricter real estate market measures and a deteriorating export environment. A mild recovery is expected in 2020.
Asia
The Indian economy could achieve faster growth from the second half of 2019 after the election. While the fiscal deficit might weigh on public investment to an extent, the wide range of infrastructure projects is likely to support growth in steel demand more than 7% in both 2019 and 2020.
Additionally, steel demand in developing Asia, except for China, is expected to increase by 6.5% and 6.4% in 2019 and 2020, becoming the fastest growing region in the global steel industry. In the ASEAN region, infrastructure development supports demand for steel.
Africa
The situation in North Africa looks better, with Egypt recovering after the structural reforms of 2017. Investment in energy and a recovery in the real estate market will be the driver of Egyptian steel demand. Other North African economies are also expected to present resilient growth in steel demand backed by strong investment activities.
CIS and Turkey
In spite of improved oil prices, growth in steel demand in Russia will continue but in a more constrained manner. The growth outlook for Ukraine is stable and improving, supported by domestic consumption.
As for the Turkish economy, it is still reacting to the currency crisis of August 2018, which caused contraction in steel demand. This is expected to continue into 2019, with some stabilisation in 2020.
Latin America
A wide recovery in steel demand in Latin America will take place 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, affected by weak mining investment, fiscal budget constraints, policy uncertainties and a slowing US economy.
Finally, the political situation in Venezuela and its impact on the region remains unclear.