Thanks to stronger-than-expected demand in China and continued growth in emerging markets, global steel demand — after falling in 2015 — looks set to rebound modestly in 2017, continuing the recovery seen this year.
That’s the view of the World Steel Association, an industry body that represents approximately 85% of the world’s steel production, who are forecasting a modest increase in demand in 2017, albeit with many caveats.
In the group’s latest semi-annual short range outlook report, released yesterday, it sees global steel demand increasing 0.2% to 1.501 billion tonnes in 2016 before rising by a further 0.5% in 2017 to 1.51 billion tonnes.
“Weakness in investment globally continues to hold back a stronger steel demand recovery,” the group said on Tuesday.
“However, a better than expected forecast for China, along with continued growth in emerging economies, will help the global steel industry to move back to a positive growth path for 2016 and onwards.
“We expect this slight growth momentum to remain weak for the time being due to the continued rebalancing in China and weak recovery in the developed economies.”
As for the caveats to this outlook, worldsteel note that there are many, only offering a series of downside risks to its modest forecast upgrades.
“Downside risks to this outlook come from the high corporate debt and real estate market situation in China, Brexit uncertainties and possible further escalation of instability in some regions,” it says.
On China, the largest user and producer of steel product globally, worldsteel notes that recent stimulus introduced by the government to boost infrastructure, residential construction and auto manufacturing ensured that the “steel demand decline in 2016 will be less severe than the worldsteel April 2016 forecast”.
However, the group casts doubt on whether these factors can continue to bolster demand in the year ahead.
“The rebound in the real estate market is limited and not sustainable as inventory levels remain very high and apartments are increasingly unaffordable to most residents,” it says.
“The construction sector will therefore continue to drag down steel demand and manufacturing sectors have only limited room for recovery.”
The group forecasts that steel demand in China will likely decline by 1.0% in 2016, and by a further 2.0% in 2017.
Helping to offset that expected decline, worldsteel expects global demand excluding China to rise by 4% “thanks to the resilient emerging Asian countries and stabilisation of commodity prices”.
Here’s an infographic from worldsteel that has its forecasts for finished steel product demand for individual regions, both for this year and next: