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Sunday, 30 December 2018
Global steel forecast sees stable demand
The Brussels-based World Steel Association (Worldsteel), in its short range outlook covering the fourth quarter of 2018 and all of 2019, is forecasting global steel demand to grow by 1.4 percent in 2019 to reach a total of more than 1.68 million metric tons.
Worldsteel sees global demand reaching nearly 1.66 million metric tons in 2018, which would represent an increase of 3.9 percent compared with the 2017 figure.
“In 2018, global steel demand continued to show resilience supported by the recovery in investment activities in developed economies and the improved performance of emerging economies,” states Saeed Ghumran Al Remeithi, chair of the Worldsteel’s Economics Committee.”
In the first half of 2018, Chinese steel demand got a boost from a stimulus package aimed at real estate and the strong global economy. However, continued economic rebalancing efforts and toughening environmental regulations will lead to deceleration of steel demand in China toward the end of 2018 and 2019, Worldsteel predicts.
Downside risks in China come from the ongoing trade friction with the U.S. and a decelerating global economy. However, if the Chinese government decides to use stimulus measures to contain the potential slowdown of its economy in the face of a deteriorating economic environment, steel demand in 2019 will be boosted, according to the association.
Steel demand in developed economies is expected to increase by 1 percent in 2018 and 1.2 percent in 2019. Demand in the U.S. for steel “grew strongly in 2017, benefiting from strong consumer spending and business investment supported by tax and regulatory changes and fiscal stimulus, although growth in the construction sector moderated,” says Worldsteel. Steel demand growth in 2019 is expected to slow as auto manufacturing and construction activity are expected to see modest growth in the U.S., though the association says other parts of the manufacturing sector in the U.S. are expected to perform well thanks to the strength of the machinery and equipment sector.
The broadening recovery of EU steel demand is expected to continue, though at a reduced pace, mainly driven by domestic demand. With business confidence high, investment and construction continued to recover while the automotive market may see slower demand growth. Though the economic fundamentals of the EU economy remain relatively healthy, steel demand in 2019 will show some deceleration over the growth seen in 2017-18, partly due to uncertainties resulting from global trade tensions, Worldsteel predicts.
As India recovers from this decade’s demonetization and goods and services tax (GST) implementation, India’s steel demand is expected to move back to a higher growth track. Steel demand will be supported by improving investment and infrastructure programs, although “stressed government finances and corporate debt weighs on the outlook” for steel in India, says Worldsteel.
In the Association of Southeast Asian Nations (ASEAN) region, sluggish construction activities and stock adjustments have led to slow growth in steel demand in 2017 and 2018. However, demand in the ASEAN region is expected to resume its growth momentum in 2019, backed by infrastructure programs. Steel demand in developing Asia (excluding China) is expected to increase by 5.9 percent in 2018 and 6.8 percent in 2019.
In the Gulf Cooperation Council (GCC) countries of the Middle East, reforms and a stronger oil market have led to an upward momentum in steel demand, but at a slow pace.
Steel demand in Turkey (the world’s largest ferrous scrap import market) is expected to contract in 2018 with the currency crisis it has faced, but the government’s stabilization measures and a consequent return to the competitiveness of the manufacturing sector is expected to help recovery in 2019, predicts Worldsteel.
Steel demand in the Latin American economies is continuing its second year of recovery backed by positive developments in the domestic and the global economy. Steel demand in Brazil continued its stable recovery in 2018. “This will continue into 2019 as election fever subsides,” according to the Worldsteel forecast. Steel demand in Mexico has suffered from uncertainties related to the NAFTA (North American Free Trade Agreement) negotiations and the election, but the recent signing of USMCA (U.S.-Mexico-Canada Agreement) and the new president calming jittery markets are expected to help the economy to recover slowly in 2019, predicts the association.