Moderate but continued growth expected for global steel demand

Commenting on the figures in Brussels at the start of the worldsteel General Assembly, held at the Steigenberger Wiltchers Hotel, TV Narendran, chairman of the worldsteel Economics Committee, said that progress had been encouraging globally. He said that the industry had witnessed a cyclical upturn which had broadened and firmed up throughout the year, leading to better than expected performances for developed and developing economies.

There were, however, two exceptions to the rule – the MENA region and Turkey.

Narendran said that populism and protectionism, viewed by worldsteel in April as risks to the global economy still remained but had abated slightly. "This leads us to conclude that we now see the best balance of risks since the 2008 economic crisis," he said, adding that escalating geopolitical tension in the Korean peninsula, China's debt problem and rising protectionism in many locations 'continue to remain risk factors'.

According to Narendran 2018 will witness moderate global growth, mainly due to slower growth in China, but rest-of-the-world steel demand will continue to maintain its current momentum.

"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 concluded.

It is important to note that China closed most of its outdated induction furnaces in 2017. Demand from this sector is now satisfied by mainstream steelmakers and, therefore, captured in the official statistics in 2017. Generally speaking, induction furnace output was not captured in official statistics, claimed worldsteel. As a consequence, the nominal growth rate for steel demand in China increased to 12.4% or 765.7Mt. Disregarding this statistical base effect, worldsteel expects that the underlying growth rate of China's steel demand for 2017 will be 3%, which will make the corresponding global growth rate 2.8%.

Narendran said that steel consumption in China in 2018 would be 0%.

Dr. Edwin Basson, director-general of worldsteel told the steel media that the amount of capacity closed by China was very similar to the USA's total steel production over a two-year period.