 "Global demand to fall 0.8% this year: World Steel Association")
Following a demand contraction of three per cent in 2015, global steel demand will decrease 0.8 per cent to 1,488 million tonnes (mt) this year, the World Steel Association said in its Short Range Outlook (SRO), released on Wednesday.
According to SRO, demand will return to the growth path at 0.4 per cent to touch 1,494 mt in 2017.
“The economic environment facing the industry continues to be challenging with China’s slowdown impacting globally across a range of indicators contributing to volatility in financial markets, sluggish growth in global trade and low oil and other commodity prices,” said T V Narendran, chairman of worldsteel Economics Committee.
The SRO, while predicting a stressed situation in the construction sector, has projected the decline in steel demand in China to be four per cent in 2016 followed by three per cent in 2017, suggesting a demand of 626.1 mt steel (15 per cent down from 2013) in 2017.
Besides, falling oil & gas-related investments and the squeeze on government spending have also affected steel demand in economies relying on oil-based revenue. On the positive side, lower oil prices have alleviated inflationary pressure in oil importing countries, giving room for monetary stimulus to boost economic growth and providing opportunities for structural reforms.
According to the industry body, steel demand in some emerging economies continues to perform below expectation. A worsening external environment in the form of weak exports, low commodity prices, capital outflows and currency devaluation add adversity to these economies.
While Brazil and Russia are struggling with internal and structural issues, steel demand in both economies is expected to contract strongly in the period ahead. In particular, the Brazilian economy with its political uncertainty has resulted in a severe contraction in steel demand of 16.7 per cent in 2015 and will contribute to a contraction of 8.8 per cent in 2016 with a recovery of only 3.1 per cent in 2017.
India’s prospects are bright thanks to low oil prices, the reform momentum and policies to increase infrastructure and manufacturing output, which will result in India’s steel demand increase by 5.4 per cent in both 2016 and 2017, reaching 88.3 mt in 2017. In Turkey, steel demand is expected to grow 3.3 per cent in 2016 and 3.2 per cent in 2017, supported by the government’s focus on pro-growth economic policies and low oil prices. Also, the demand in Thailand, Malaysia, Vietnam, Indonesia and the Philippines is also expected to maintain a growth rate of nearly six per cent to touch 74.6 mt in 2017.
While developed economies are also feeling the effect of the worsening global economic environment, they are expected to maintain a stable recovery momentum. Steel demand in the developed economies is projected to grow 1.7 per cent in 2016 and 1.1 per cent in 2017.
In the European Union (EU), a mild recovery in steel demand continues with generally improving economic sentiments and investment conditions.
However, uncertainties in the political landscape related to the refugee crisis raise risks to the improving economic condition. Steel demand in the EU is forecast to grow by 1.4 per cent in 2016 and a further 1.7 per cent in 2017.
In the US, steel demand is dampened by the fall in oil prices and a strong dollar, but an improving job market and a robust housing sector will support steel demand, which is expected to grow 3.2 per cent in 2016 and 2.7 per cent in 2017.
According to SRO, demand will return to the growth path at 0.4 per cent to touch 1,494 mt in 2017.
“The economic environment facing the industry continues to be challenging with China’s slowdown impacting globally across a range of indicators contributing to volatility in financial markets, sluggish growth in global trade and low oil and other commodity prices,” said T V Narendran, chairman of worldsteel Economics Committee.
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According to the association, while rebalancing of the Chinese economy is under progress, it has continued to decelerate, particularly in the construction sector, whose effects have drilled down to the manufacturing sectors, especially in metal products and the automotive segment.
The SRO, while predicting a stressed situation in the construction sector, has projected the decline in steel demand in China to be four per cent in 2016 followed by three per cent in 2017, suggesting a demand of 626.1 mt steel (15 per cent down from 2013) in 2017.
Besides, falling oil & gas-related investments and the squeeze on government spending have also affected steel demand in economies relying on oil-based revenue. On the positive side, lower oil prices have alleviated inflationary pressure in oil importing countries, giving room for monetary stimulus to boost economic growth and providing opportunities for structural reforms.
According to the industry body, steel demand in some emerging economies continues to perform below expectation. A worsening external environment in the form of weak exports, low commodity prices, capital outflows and currency devaluation add adversity to these economies.
While Brazil and Russia are struggling with internal and structural issues, steel demand in both economies is expected to contract strongly in the period ahead. In particular, the Brazilian economy with its political uncertainty has resulted in a severe contraction in steel demand of 16.7 per cent in 2015 and will contribute to a contraction of 8.8 per cent in 2016 with a recovery of only 3.1 per cent in 2017.
India’s prospects are bright thanks to low oil prices, the reform momentum and policies to increase infrastructure and manufacturing output, which will result in India’s steel demand increase by 5.4 per cent in both 2016 and 2017, reaching 88.3 mt in 2017. In Turkey, steel demand is expected to grow 3.3 per cent in 2016 and 3.2 per cent in 2017, supported by the government’s focus on pro-growth economic policies and low oil prices. Also, the demand in Thailand, Malaysia, Vietnam, Indonesia and the Philippines is also expected to maintain a growth rate of nearly six per cent to touch 74.6 mt in 2017.
While developed economies are also feeling the effect of the worsening global economic environment, they are expected to maintain a stable recovery momentum. Steel demand in the developed economies is projected to grow 1.7 per cent in 2016 and 1.1 per cent in 2017.
In the European Union (EU), a mild recovery in steel demand continues with generally improving economic sentiments and investment conditions.
However, uncertainties in the political landscape related to the refugee crisis raise risks to the improving economic condition. Steel demand in the EU is forecast to grow by 1.4 per cent in 2016 and a further 1.7 per cent in 2017.
In the US, steel demand is dampened by the fall in oil prices and a strong dollar, but an improving job market and a robust housing sector will support steel demand, which is expected to grow 3.2 per cent in 2016 and 2.7 per cent in 2017.