Nov. 8, 2017

WSA Forecasts 1.6% Growth in Global Demand in 2018

The Brussels-based World Steel Association forecasts global steel demand will reach 1.65 billion metric tons in 2018, a 1.6 percent increase over the expected total from 2017. Global steel demand excluding China is expected to increase 3.0 percent from 2017.

“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,” says T.V. Narendran, chairman of the WSA’s Economics Committee. “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.”

Some risks remain, however. Escalating political tension in the Korean peninsula, China’s debt problem and rising protectionism in many locations are still a concern.

“In 2018, we expect global growth to moderate, mainly due to slower growth in China, while in the rest of the world, steel demand will continue to maintain its current momentum,” Narendran says. “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.”

In the developed world, the U.S. economy continues to exhibit robust fundamentals supported by strong consumer spending and rising business confidence. Concern about tensions within the EU particularly 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. 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, steel demand in the developed economies is expected to increase by 2.3 percent in 2017 and 0.9 percent in 2018.


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Thursday, November 23, 2017