Oct. 26, 2016

WSA Predicts Global Steel Growth in 2017

The World Steel Association expects global steel demand to increase by 0.5 percent to 1.51 billion tons in 2017. The Brussel-based organization says global demand will increase 0.2 percent to 1.50 billion tons this year after contracting by 3.0 percent in 2015.

“The steel industry environment remains challenging, with escalated uncertainties driven by geopolitical situations in various parts of the world. The recent UK referendum outcome has further raised uncertainty on the long-awaited recovery of investment in the EU,” says T.V. Narendran, chairman of WSA’s Economics Committee.

Weak global investment continues to hold back a stronger steel demand recovery. However, a better-than-expected forecast for China, along with continued growth in emerging economies, will help the global steel industry move back to a positive-growth path. “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,” he adds.

Downside risks to this outlook include high corporate debt, the real estate slowdown in China, Brexit uncertainties and possible escalation of instability in some regions. On a positive note, steel demand in the emerging and developing economies, excluding China, is expected to accelerate to 4.0 percent growth in 2017, thanks to the resilient emerging Asian countries and stabilization of commodity prices.

Investment is subdued in many regions, not only in China, which is undergoing a rebalancing away from investment-driven growth. In the developed world, despite persistently low interest rates, private investment remains weak due to a pessimistic outlook on future demand and other uncertainties. Governments have only limited monetary and fiscal policy tools left to boost investment, WSA notes.

While the U.S. economy continues to show strength, steel demand in the U.S. is struggling to grow due to the strong dollar, which hurts the manufacturing sector, and the collapse in shale-related investments. Likewise, Japan’s steel demand is subdued due to structural issues and the appreciation of the yen after the UK referendum.

WSA predicts that developed economies will maintain a moderate recovery. Recovery in the EU continues despite the Brexit uncertainties. The UK, however, is expected to see steel demand decline due to the referendum.


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Friday, October 20, 2017