World Steel Association said that global steel demand growth slowed down in 2018.
The World Steel Association said on Monday that global steel demand is projected to decline by 1.6% in 2018 after strong demand-driven growth in China, a major steel consumer, in 2017.
World Steel Association said the demand for steel will rise from 1.622 billion tons this year to 1.648 billion tons next year. The 2017 figure is equivalent to a nominal increase of 7% and a real increase of 2.8%.
“The global economic risk … has been reduced … We have seen the risk at its best balance since the 2008 economic crisis,” said a statement issued by the World Steel Association at a conference in Brussels. However, the association added: “We expect the growth slowdown in 2018, mainly because of the slowdown in China.”
The steel industry, with an annual output value of 900 billion U.S. dollars, is a measure of the world economy. MEPS consultants said the average global steel price rose 50% from its lowest level in 12 years reached in December 2015.
This year China closed most of its old and illegal induction furnaces, which were not previously included in official demand statistics and therefore have a one-time effect on both nominal and actual demand. The World Steel Association estimates that China’s steel demand will reach 765.7 million tons this year and next. According to the World Steel Association, the data for 2017 corresponds to a nominal increase of 12.4% this year and a real increase of 3%. However, China’s steel demand will be flat next year.
The World Steel Association represents more than 160 steel producers, which account for 85% of global production. In April, the Association had estimated that global demand would only grow by 1.3% in 2017 and by 0.9% in 2018. “The progress of the global steel market so far this year has been encouraging, and we see the cyclical recovery is expanding and getting stronger …” said Narendran, president of the World Steel Economics Committee.
Although the future prospects, especially in the long run, are less optimistic. “The lack of a strong growth engine that can replace China and the long-term decline in steel intensity due to technical and environmental factors will continue to put pressure on steel demand in the future,” the World Steel Association said.
India is the third-largest consumer of steel in the world and following China’s best hope. Its demand is expected to increase only by 4.4% this year, by 5.7% next year and by 6.1% and 7.1% in April respectively. On the plus side, overcapacity has been reduced, largely thanks to the reduction in excess capacity in China, said Edwin Basson, director general of the World Steel Association, at the conference. “There is ample evidence that China is closing production capacity equivalent to production capacity across the United States in two years, with induction furnaces closed the most,” said Basson.
“There is (still) enough capacity globally to meet demand for the next 20 years, but we are confident (because the G20 is working on the issue and there is good cooperation among all member countries.”)
China’s official statistics show that since the beginning of last year, China has reduced its production capacity of nearly 100 million tons of legitimate steel and 120 million tons of illegal induction furnaces.
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