Steel demand to witness cyclical upturn in 2017 and 2018, says worldsteel SRO

SEATTLE (Scrap Monster): The World Steel Association (worldsteel) has announced release of its Short Range Outlook (SRO) for 2017 and 2018. The report states that steel recovery has strengthened in 2016. Further, the global steel demand is likely to increase in 2017 and 2018. However, reduced demand growth rate in China is likely to offset growth in other regions, thereby impacting overall global steel demand, SRO notes.

In 2016, global steel demand posted stronger-than-expected growth, with China being the main contributor of growth. The steel demand will see a cyclical upturn in 2017 and 2018. Developed economies are expected to see continued growth in steel demand recovery. The growth momentum is likely to accelerate further in emerging and developing economies. According to worldsteel’s SRO, the global steel demand is likely to increase by 1.3% in 2017 to 1,535.2 million tonnes (Mt) in 2017. In 2018, it is forecast to increase further by 0.9% to touch 1,548.5 Mt.

Country-wise, Russia and Brazil are expected to move out of their recessions. However, steel demand growth rate in China may remain subdued. As a result, the overall growth momentum is expected to remain modest during 2017 and 2018.

According to forecast, many regions including the CIS, NAFTA, Central and South America, Africa and the Middle East, which had recorded negative demand growth in 2016, are likely to see positive growth in 2017 and 2018. The projected steel demand growth for CIS region stands at 3.2% and 3.4% respectively in 2017 and 2018. The NAFTA steel demand is projected to increase by 2.2% and 2.4%. Central and South America is likely to witness strong steel demand growth of 3.4% and 4.7% respectively. African steel demand is expected to rise by 1.5% in 2017 and further strongly by 4.1% in 2018. The Middle East demand growth is forecast to increase by 3.1% and 3.7% respectively.

The automotive sector emerged as the top steel consuming sector in 2016. However, the SRO forecasts that this demand is soon approaching peak. 2016 presented a divided picture with respect to demand from construction, building and infrastructure sector. The sector demand remained strong in developing countries. On the other hand, it remained subdued in developed economies. In 2017 and 2018, the construction sector demand is likely to improve, mainly driven by the EU region and the US. The machinery sector steel demand is also projected to increase. Meantime, demand from shipbuilding sector is expected to continue its weak run.

China’s steel demand growth recorded marginal growth of 1.3% in 2016. The demand growth which has looked strong so far in 2017 is likely to decelerate on account of tightening of real estate policies by the Chinese administration. Consequently, the country’s steel demand is expected to remain flat in 2017 and then decline by 2% in 2018.

The steel demand in developed economies is likely to grow. The fiscal stimuli package and rise in infrastructure spending by the new US administration and the Eurozone monetary policy are being identified as the key drivers behind the projected steel demand growth by developed economies. The developed economies will report steel demand growth of 0.7% and 1.2% in 2017 and 2018 respectively.

Meantime, steel demand in emerging and developing economies excluding China is expected to grow by 4% in 2017 and then by 4.9% in 2018.