This map shows the grim outlook for steel demand around the world

Photo by China Photos/Getty Images

After falling 3.0% last year, global steel demand is tipped to contract even further this year before stabilising in 2017.

That’s the view of the World Steel Association in its latest semi-annual short range outlook report released overnight with the group forecasting that global steel demand will slip by a further 0.8% to 1,488 million tonnes in 2016.

World Steel represents approximately 85% of the world’s steel production, accounting for over 150 individual steel producers including nine of the top ten globally.

According to TV Narendran, chairman of the World Steel economics committee, weakness is likely to be concentrated in the world’s largest source of demand, China.

“The economic environment facing the steel 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,” says Narendran.

“While rebalancing progresses, the Chinese economy continues to decelerate. The severe depression in construction activities is contributing to a slowdown in the manufacturing sectors, especially metal products, as well as slower growth in automotive. A recovery for the construction sector is not forecast in the near future.”

According to the group, demand in China is forecast to slide 4% this year before contracting 3.0% in 2017, leaving annual demand for steel product at 626.1 million tonnes, down 15% on the levels of 2013.

Although demand in China is forecast to weaken further this year and next, the group is more optimistic on the outlook for steel demand elsewhere, predicting modest growth in 2017 across all major regions.

“Some emerging economies in South and Southeast Asia show resilient growth and along with NAFTA and the EU will support a recovery in 2017. We expect that steel demand outside China will continue to grow by 1.8% in 2016 and this growth will accelerate to 3.0 % in 2017,” says the group.

Ominously, WorldSteel only offered downside risks to its forecasts, suggesting that “the Chinese real estate market and corporate debt problem, anxiety in the financial markets, high (household) debt and volatile capital flows in many emerging economies, geopolitical tensions and unstable political situations in several regions could further worsen the global economic environment”.

The infographic below, supplied by the World Steel Association, reveals the groups forecasts steel demand for individual regions this year and next.


Despite the tepid forecast offered by the group, iron ore — the key steel-making ingredient — has seen its price rise nearly 40% since the beginning of the year, mirroring strength seen in Chinese steel prices.

In the 12 months to March 2016, China imported 969 million tonnes of iron ore, the largest annual total on record.

Stockpiles of ore at major Chinese ports currently sit at around 95 million tonnes according to the Steel Index, leaving them at levels not seen since April 2015.