Alpine Metals FZCo is your leading stockholder, supplier and distributor of structural steel products and steel pipes in the UAE, catering to clients all over the GCC.

Plot S10305, South Zone 1, Jebel Ali Free Zone, Dubai, United Arab Emirates

©2020 by Alpine Metals FZCo

Search

Growth in steel demand forecast to slow next year

Growth in global demand for steel is forecast to slow in 2018, with China’s consumption of the metal expected to flatline as the Chinese economy matures and shifts focus from manufacturing to services.


Overall demand for the commodity will increase 1.6 per cent to 1.65bn tonnes next year, according to estimates by the World Steel Association. That compares with an underlying growth rate of 2.8 per cent in 2017. Despite the slowdown, the figures mark an improvement compared with earlier estimates by the trade body, of 1.3 per cent demand growth this year and 0.9 per cent in 2018. Steel is often viewed as an economic barometer because it is used in carmaking, construction and manufacturing.


“The global steel demand recovery is solid,” said T.V. Narendran, chairman of the Worldsteel Economics Committee. A collapse in the metal’s value two years ago due to oversupply hit earnings hard at companies including ArcelorMittal, US Steel and Posco, although prices have since risen from decade-long lows. “Progress in the global steel market this year to date has been encouraging,” said Mr Narendran, a managing director at Indian group Tata Steel. “We have seen the cyclical upturn broadening and firming throughout the year, leading to better than expected performances for both developed and developing economies, although the [Middle East and north Africa] region and Turkey have been an exception,” he added. “In 2018, we expect global growth to moderate, mainly due to slower growth in China.” All geographic regions are expected to witness demand growth in 2018, while only Africa and the grouping of non-EU European countries will consume less this year, according to the WSA. As the producer of nearly half the world’s steel tonnage, China exerts a huge influence on industry dynamics and has been accused by other countries of dumping its excess output on to international markets at lowball prices. Seth Rosenfeld, an analyst at Jefferies, said he believed that China’s steel production would stagnate in 2018, roughly in sync with domestic demand, as Beijing pressed ahead with plans to shutter unneeded steel factories. “Chinese steel exports have plunged 30 per cent [so far in 2017], reversing years of export growth that painfully took share from western steelmakers. It seems clear that Chinese steelmakers no longer view exports as a necessary release valve,” said Mr Rosenfeld. With Chinese mills operating at high utilisation rates, their exports should continue to decline, supporting “robust” western steel prices and profit margins, added Mr Rosenfeld.


Elsewhere, steel demand growth in India, where the government wants to more than double production capacity by 2030 as it pursues a massive infrastructure programme, was downgraded for this year and next. This was partly down to the impact of last year’s withdrawal of large amounts of banknotes, as well as deleveraging in the manufacturing and banking sectors. Nominal global steel demand growth is forecast at 7 per cent in 2017, due to a statistical anomaly caused by China’s closure of most of its outdated induction furnaces this year.


Source: Financial Times