Posted on 03 Nov 2016
While China’s steel demand will continue to shrink, worldsteel expects the decline to be softened by the introduction of a number of mini stimulus measures by the Chinese government, boosting infrastructure spending, real estate market and auto sales. It now expects China’s steel demand to reduce by 1% this year, compared with the 4% decline it forecast in April, to 665.6 million tonnes. Looking to 2017, worldsteel projects a further 2% decline in Chinese steel consumption to 652.3 million tonnes.
For the other emerging Asian economies, India is expected to register solid growth rates in steel demand of 5.4% and 5.7% for 2016 and 2017 respectively. The country’s steel consumption is projected to reach 84.4 million tonnes this year and 89.1 million tonnes in 2017. worldsteel attributed India’s strong steel demand growth to the country’s consumption-boosting reforms and infrastructure investment but it also voiced its concern over the country’s ability to sustain the growth rate due to the continuing weak private investment.
For ASEAN-5, worldsteel expects the grouping’s steel consumption to increase strongly by 8.3% in 2016 to 70.5 million tonnes. It also projects that steel demand will further expand by 6.3% to touch 75.0 million tonnes in 2017. According to worldsteel, the strong steel demand growth in ASEAN-5 is driven by construction activities which have benefited from the stable macroeconomic policies.
For the developed economies, steel demand in the USA is expected to drop by 1.2% to 95.0 million tonnes in 2016 before picking up by 3.0% to 97.8 million tonnes in 2017. The EU-28, on the other hand, is forecast to see a marginal increase of 0.8% in steel demand this year to 154.8 million tonnes, and the demand will further increase by 1.4% in 2017 to 156.9 million tonnes. In the case of Japan, the country’s steel demand growth is expected to remain subdued, declining by 0.4% in 2016 to 62.7 million tonnes before picking up marginally by 1.4% to 63.6 million tonnes in 2017.
From the above, it is reasonable to conclude that the worst is over for the global steel industry and that the industry is slowly stabilising. Steel prices have also recovered from their record lows in October 2015 although volatility in price movements is still around. However, the global steel environment is still fraught with uncertainties with global economic growth as well as steel demand growth momentum remaining weak.
TAN AH YONG
