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Demand for steel is still growing, but it can be expected to moderate in line with overall declines in overall economic growth.
The World Steel Association released its Short Range Outlook (SRO) this week, which forecasts a 1.3% increase in global steel demand this year and a 1.0% increase in 2020.
“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,” said Al Remeithi, chairman of the World Steel Association’s Economics Committee. “Uncertainty over the trade environment and volatility in the financial markets have not yet subsided and could pose downside risks to this forecast.”
While the 2019 forecast is still in positive territory, it would mark a decline from 2.1% demand growth in 2018.
China, of course, is undergoing trade talks with the U.S., which last year slapped a total of $250 billion worth of tariffs on imports from China. As with other industry sectors, China’s growth levels are closely monitored in the context of global growth trends.
According to the SRO, China’s steel demand is getting a boost this year from government stimulus measures.
“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,” the SRO states. “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.”
However, the SRO forecasts a “minor contraction” in Chinese steel demand in 2020 as government stimulus measures subside.
Steel demand is expected to continue to decelerate in developing countries. Demand growth in developing countries hit 3.1% in 2017, fell to 1.8% in 2018 and is forecast to drop to 0.3% in 2019.
The overall trend in declining demand is also expected to impact the automotive and construction sectors.
“As pent-up demand and government stimulus measures subsided, the automotive industry saw a sharp slowdown in growth in 2018 in many countries, in particular in the EU, Turkey and China,” the SRO states. “The largest decline was observed in Turkey (-9.0%) and in the UK (-5.5%). As a result, global auto production growth decelerated to 2.2% in 2018 from 4.9% in 2017.”
For the full report, visit the World Steel Association website.