According to Mr. Al Remeithi, Chairman of the worldsteel Economics Committee
Demand for steel in emerging economies, excluding China, expected to grow by 2.9% and 4.6% in 2019 and 2020 respectively
Demand for steel globally is expected to grow by 1.3% and 0.9% in 2019 and 2020 respectively
Demand for steel in the Middle East (MENA) region is expected to contract in 2019 before recovering in 2020
16 April 2019 – Madrid, Spain: The World Steel Association’s (worldsteel) Economic Committee, led by Engineer Saeed Ghumran Al Remeithi, Chief Executive Officer of Emirates Steel and Chairman of the worldsteel Economic Committee, has released today its Short Range Outlook (SRO), during its bi-annual meeting in Madrid, Spain.
According to the report, worldsteel projects global steel demand will reach 1,735 Mt in 2019, an increase of 1.3% over 2018. In 2020, it forecasts global steel demand growing by 0.9% to reach 1,752 Mt.
Commenting on the outlook, Eng. Al Remeithi said: “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. Uncertainty over the trade environment and volatility in the financial markets has not yet subsided and could pose downside risks to this forecast.”
“In 2018, global steel demand increased by 2.1%, after adjusting for China’s induction furnace closures, growing slightly slower than in 2017. In 2019 and 2020 growth is still expected, but in a less favorable economic environment. China’s deceleration, a slowing global economy, and uncertainty surrounding trade policies and the political situation in many regions suggest a possible moderation in business confidence and investment,” added Eng. Al Remeithi.
“In the Middle East region, steel demand is expected to contract by -2.6% to 48.9 Mt in 2019, with a minor recovery forecasted in 2020 with demand expected to reach 49.5 Mt, a growth of 1.2%. Economic diversification efforts in the GCC continue but fiscal consolidation is still suppressing construction activities, however, in North Africa the situation looks brighter with Egypt recovering strongly after the structural reforms of 2017,” concluded Eng. Al Remeithi.
Global steel demand trends and highlights for 2019 and 2020
China:
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. 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. In 2020, a minor contraction in Chinese steel demand is forecasted as the stimulus effects are expected to subside.
United Stated of America:
Steel demand in the developed economies grew by 1.8% in 2018 following a resilient 3.1% growth in 2017. Demand is expected to further decelerate to 0.3% in 2019 and 0.7% in 2020, reflecting a deteriorating trade environment.
In 2019, the US growth pattern is expected to slow with the waning effect of fiscal stimulus and monetary policy normalization. Therefore, both construction and manufacturing growth will moderate. Investment in oil and gas exploration is expected to decelerate as well, while a boost in infrastructure spending is not expected.
European Union:
The European Union (EU) economies are also facing a deteriorating trade environment as well as uncertainty over Brexit. Slower growth in demand for steel is expected 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.
Japan and Korea:
Japan recorded growth in steel demand in 2018, supported by a favorable investment environment and continued construction activities as well as a boost in consumer spending prior to the consumption tax increase. In 2019 and 2020, steel demand is likely to contract slightly due to a moderation of construction activities and decelerating exports despite the support provided by public projects.
Steel demand in Korea has been contracting since 2017 due to reduced demand from two major steel using sectors, shipbuilding and automotive. Steel demand is expected to continue declining in 2019 due to toughened real estate market measures and a deteriorating export environment. A mild recovery is expected in 2020.
Asia:
Steel demand in the emerging economies, excluding China, is expected to grow by 2.9% and 4.6% in 2019 and 2020 respectively, and steel demand in developing Asia, again excluding China, is expected to grow by 6.5% and 6.4% in 2019 and 2020 respectively, making it the fastest growing region in the global steel industry.
In India, having overcome the shocks of demonetization and the Goods & Services Tax (GST) implementation, the economy is now expected to achieve faster growth starting in the second half of 2019 after the election. While the fiscal deficit might weigh on public investment to an extent, the wide range of continuing infrastructure projects is likely to support growth in steel demand above 7% in both 2019 and 2020.
In the ASEAN region, infrastructure development continues to support demand for steel.
Turkey and Russia:
With improved oil prices, growth in steel demand in Russia will continue but is expected to be constrained by structural issues.
The Turkish economy is still reacting to the currency crisis of August 2018, which led to contraction in steel demand. This is expected to continue into 2019, with some stabilization in 2020.
Latin American:
A broad recovery in steel demand across Latin America is expected to continue 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, influenced by weak mining investment, fiscal budget constraints, policy uncertainties and a slowing US economy. The political situation in Venezuela and its impact on the region is unclear.