Worldsteel releases its Short Range Outlook 2017/2018

Worldsteel releases its Short Range Outlook 2017/2018
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The World Steel Association (Worldsteel), Brussels, has released its October 2017 Short Range Outlook (SRO), which forecasts that global steel demand will reach 1,622.1 million metric tons in 2017 and 1,648.1 million metric tons in 2018.

Excluding China, the association forecasts global steel demand will reach 856.4 million metric tons in 2017, an increase of 2.6 percent, and 882.4 million metric tons in 2018, an increase of 3 percent.

Worldsteel says China closed most of its outdated induction furnaces in 2017, a category that was generally not captured in official statistics. With induction furnaces closing, demand from this sector of the market is now satisfied by mainstream steelmakers and is captured in the official statistics in 2017. Consequently, the nominal growth rate for steel demand in China increased to 12.4 percent, or 765.7 million metric tons. Disregarding this statistical base effect, Worldsteel says it expects the underlying growth rate of China’s steel demand for 2017 will be 3 percent, which will make the corresponding global growth rate 2.8 percent.

T.V. Narendran, chairman of the Worldsteel Economics Committee, says, “Progress in the global steel market this year to date has been encouraging. 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 MENA (Middle East and North Africa) region and Turkey have been an exception.”

He continues, “The risks to the global economy that we referred to in our April 2017 outlook, such as rising populism/protectionism, U.S. policy shifts, EU election uncertainties and China deceleration, although remaining, have to some extent abated. This leads us to conclude that we now see the best balance of risks since the 2008 economic crisis. However, escalating geopolitical tension in the Korean peninsula, China’s debt problem and rising protectionism in many locations continue to remain risk factors.”

In 2018, Narendran says Worldsteel expects global growth to moderate, mainly because of slower growth in China, while steel demand in the rest of the world will continue to maintain its current momentum.

“So, world steel demand is recovering well, driven largely by cyclical factors rather than structural. The lack of a strong growth engine to replace China and a long-term decline in steel intensity due to technological and environmental factors will continue to weigh on steel demand in the future,” Narendran adds.

Advanced and developing economies are showing stronger economic momentum this year, Worldteel says. Confidence and investment sentiment are improving in a large part of the world, despite some financial market volatility and growing concern related to stock market overvaluation.

Additionally, global trade is gaining momentum despite worries about rising protectionism and talks of rearranging existing free trade agreements, the association says.

The U.S. economy continues to exhibit robust fundamentals supported by strong consumer spending and rising business confidence, according to WorldSteel’s analysis. Concern about tensions within the EU over migration policies is receding and the EU economic recovery is broadening. Japanese steel demand is showing better-than-expected performance benefitting from the government stimulus package, improving exports and preparations for the 2020 Olympic games.

On the other hand, South Korea’s steel demand is suffering from high consumer debts, weakening construction and a depressed shipbuilding sector, while escalated tension around the North Korean nuclear weapons threat poses a serious and highly unpredictable risk.

With these generally favorable developments, Worldsteel says it expects steel demand in the developed economies to increase by 2.3 percent in 2017 and by 0.9 percent in 2018.

The Chinese economy, which has been gradually decelerating, increasingly is supported by consumption, while investment continues to decelerate. However, the association says, government stimuli, particularly a moderate boost to the construction program, contributed to increased gross domestic product (GDP) growth in 2017.

WorldSteel says it expects China’s steel demand to increase by 3 percent in 2017, an upward revision over its previous forecast. The recent closure of induction furnaces will lead to a one-off jump in measured steel use in 2017 to 12.4 percent, the association adds.

The outlook for China’s steel demand in 2018 remains subdued, according to Worldsteel, showing no growth over 2017 as the government resumes and strengthens its efforts on economic rebalancing and environmental protection.

Developing countries are benefitting from the global recovery and to economic reforms at varying degrees, Worldsteel says. The reform agendas in many developing countries such as Egypt, Brazil, Argentina, Mexico and India are expected to enhance their growth potential over time.

India had a slowdown in economic activity in 2017, but Worldsteel says accelerating government reforms are expected to bring about a better investment environment leading to growth in the coming years. Investment activities remain driven by government initiatives, while private sector investment remains restrained because of leveraged corporate balance sheets.

The ASEAN (Association of Southeast Asian Nations) region, especially Vietnam and the Philippines, remains a high growth region, while more mature economies, such as Thailand and Malaysia, are showing slower growth, the association says.

In the Commonwealth of Independent States (CIS) steel demand is expected to strengthen in 2017-2018, with Russia, in particular, likely to maintain its slow recovery.

WorldSteel says it expects Turkish steel demand to resume growth momentum in 2018.

The MENA (Middle East North Africa) region’s outlook has suffered from low oil prices, geopolitical strife and high inflation and would benefit from reconstruction efforts once the major conflicts are ended, the association says.

Gulf Cooperation Council (GCC) countries continue to struggle with low oil prices, and countries in South America have been slow to benefit from the recovery in the global economy. In Brazil, continuing depressed construction activity has held demand recovery back in 2017, but a stronger recovery is expected in 2018, Worldsteel says.

Steel demand in the developing economies, excluding China, is expected to grow by 2.8 percent in 2017 and by 4.9 percent in 2018.

The association says the construction and machinery sectors likely will benefit from improving investment sentiments, while the automotive sector might moderate.

The construction sector in the developed economies, which had been slow to recover from its collapse after the 2008 economic crisis, is showing more positive signs in the residential and commercial sectors because of rising incomes and improving investment sentiments. Worldsteel says infrastructure investment, which has driven steel demand in developing countries, likely will get additional support from the developed world’s infrastructure renewal initiatives.

The global automotive sector is reporting strong performance in 2017, with especially strong performance in Turkey and Mexico. However, in the U.S. and China, the auto sector could moderate and this trend is likely to extend to other countries in 2018.

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Source: Recycling Today
Worldsteel releases its Short Range Outlook 2017/2018
<![CDATA[The World Steel Association (Worldsteel), Brussels, has released its October 2017 Short Range Outlook (SRO), which forecasts that global steel demand will reach 1,622.1 million metric tons in 2017 and 1,648.1 million metric tons in 2018. Excluding China, the association forecasts global steel demand will reach 856.4 million metric tons in 2017, an increase of 2.6 percent, and 882.4 million metric tons in 2018, an increase of 3 percent. Worldsteel says China closed most of its outdated induction furnaces in 2017, a category that was generally not captured in official statistics. With induction furnaces closing, demand from this sector of the market is now satisfied by mainstream steelmakers and is captured in the official statistics in 2017. Consequently, the nominal growth rate for steel demand in China increased to 12.4 percent, or 765.7 million metric tons. Disregarding this statistical base effect, Worldsteel says it expects the underlying growth rate of China’s steel demand for 2017 will be 3 percent, which will make the corresponding global growth rate 2.8 percent. T.V. Narendran, chairman of the Worldsteel Economics Committee, says, “Progress in the global steel market this year to date has been encouraging. We have seen the cyclical upturn broadening and firming…