The World Steel Association, often abbreviated as worldsteel, has revised upwards its 2019 Short-Range Outlook (SRO) for steel demand on the back of strong Chinese demand.
Updating its SRO forecast numbers for finished steel demand at its General Assembly in Monterrey, Mexico, worldsteel announced that global steel demand for calendar 2019 will grow by 3.9% to 1,775 million tonnes (MnT), compared to an earlier forecast of 1.3% growth to 1,735 MnT announced in April, 2019.
For the year 2020, as per the new projected numbers, global steel demand is expected to cross the 1,800-MnT mark for the first time in the history of WSA, reaching 1,805.7MnT, compared to the April forecast of 1,751.6 MnT with the support of higher demand expected from emerging and developing economies, excluding China.
Brussels, Belgium-based World Steel Association is the largest international trade body for the iron and steel industry. The association represents steel producers, national and regional steel industry associations and steel research institutes. Its members represent around 85% of global steel production.
Every year, the global steel body releases its Short Range Outlook for finished steel demand twice a year, mostly in mid-April and October. In its October SRO, the body said: “In 2019, steel demand in China will grow by 7.8% to reach 900.1 MnT and the rest of the world is expected to record 0.2% growth to 874.9 MnT. In 2020, Chinese steel demand is expected to grow by 1.0%, whereas steel demand in the rest of the world will grow by 2.5%, driven by 4.1% growth in the emerging and developing economies excluding China.”
Commenting on the outlook, Al Remeithi, Chairman of the worldsteel Economics Committee, said, “The current SRO suggests that global steel demand will continue to grow in 2019, more than we expected in these challenging times, mainly due to China.”
He added: “In the rest of the world, steel demand slowed in 2019 as uncertainty, trade tensions and geo-political issues weighed on investment and trade. Manufacturing, particularly the auto industry, has performed poorly contracting in many countries. However, in construction, despite some slowing, a positive momentum has been maintained.”
“While the global economic outlook is highly unpredictable, we expect to see further growth in steel demand in 2020 of 1.7%, with emerging and developing economies, excluding China, contributing more. This forecast faces significant downside risks if the current level of uncertainty prevails,” Al Remeithi further said.
Demand In Developed World Stagnates
After growing by 1.2% in 2018, steel demand in the developed economies is expected to show a small contraction of -0.1% in 2019. The consumer segment and construction maintained a positive momentum. However, manufacturing slumped due to a deteriorating environment for exports and investment. In 2020, with the effect of some technical rebound, steel demand in the developed world is expected to grow by 0.6%.
Developing Economies: A Mixed Picture
Growth of steel demand in the emerging economies, excluding China, is expected to slow down to 0.4% in 2019 due to contractions in Turkey, MENA and Latin America. But the growth is expected to rebound to 4.1% in 2020 due to infrastructure investments, especially in Asia.
Construction Sector Slows Down
The global construction sector’s growth is expected to slow to 1.5% in 2019 and 1.2% in 2020 after a growth of 2.8% in 2018.
The picture for construction activity in the developed economies in 2019-2020 is somewhat mixed. The US construction sector is expected to weaken in 2019 with no recovery in 2020. In Europe, the construction sectors in Germany, Spain, the Netherlands and Central European economies, while still maintaining growth, will slow down due to weakening economic fundamentals and constraints in construction capacity. Civil engineering is expected to be the construction driver owing to investment in energy, transport and communication networks.
The Japanese construction sector is projected to report almost no growth as the decline in residential construction will be offset by growth in civil engineering. South Korea’s construction sector is expected to continue contracting despite some support from public projects.
Construction in emerging markets will be strong, largely influenced by infrastructure projects. In China, the real estate sector drove growth in construction activity in 2019, but in 2020 this will slow down. Infrastructure investment is expected to be boosted by government stimulus. In ASEAN and India, active infrastructure investment is expected to drive construction.
Auto Hits Bump, Pick-Up Likely In 2020
Global automotive production decelerated in 2018 and is expected to contract in 2019 with recession deepening and broadening across several major markets, including Germany, Turkey, China and South Korea. The automotive market has been hit by more than global economic factors, including market saturation, reduction in purchasing and promotion incentives and most importantly customer hesitancy during the transition of the auto industry from combustion engine-powered via hybrid to fully electric vehicles.
This decline has been particularly severe in Germany and China with passenger car production declining by -10.6% and -13.8%, respectively in the first eight months of 2019. It is expected that the Chinese government may introduce some tax measures to boost sales of passenger vehicles, especially new energy vehicles. This could lead to a recovery in 2020.
In the US, the auto market is expected to decelerate with no growth in 2019 and only a slight increase in 2020, but steel use is expected to benefit from the shift toward light truck models. Japanese and Korean car production is being affected by weak export markets.
The Indian automotive industry suffered from the liquidity crisis and weak global demand to show almost no growth in 2019, but it is expected to pick up in 2020 before the introduction of stringent pollution standards in April 2020. The Turkish auto industry continues to struggle with contraction in both domestic and export markets. In Brazil and Mexico, auto production maintained a positive level but witnessed slowing growth in 2019.
Mechanical Machinery Sector Decelerating
After strong growth in 2017-18, the global mechanical machinery segment is expected to decelerate to remain flat in 2019-20 on the back of a slowdown in the global economy and continuation of trade tensions that are hurting global investment activities.
Mechanical machinery output in major exporters – China, Germany and Japan – is expected to keep falling in 2020. The Chinese mechanical machinery sector is expected to decline by -1.0% in 2019, even though the replacement demand for equipment will provide some support in 2019 and 2020.
General-purpose machinery, including energy-related, will positively contribute to the sector’s growth. On the other hand, construction machinery is expected to decline in 2019 and 2020, but the decline will be partially offset by the demand deriving from expansion of infrastructure projects in developing countries.
Source : https://www.steel-360.com