Global steel demand is projected to grow by 3.9% in 2019, and additional 1.7% in 2020, according to worldsteel’s short range outlook (SRO) report for October 2019.
Source: worldsteel
3-minute read
According to worldsteel, the global steel market remains resilient, despite the current economic climate. “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.” Say Mr. Al Remeithi, chairman of the worldsteel Economics Committee.
Similarly, Al Remeithi notes that global demand outside of China has slowed due to geopolitical tensions, and contractions in the auto-manufacturing industry have been affecting many countries.
Despite the uncertain market, worldsteel expects to see a 3.9% growth in global demand in 2019 (1,775.0 Mt) and another 1.7% in 2020 (1,805.7 Mt). However, if current market conditions prevail, this forecast may face a significant downside risk, according to Al Remeithi.
Steel demand in developed economies
Following a 1.2% increase in 2018, steel demand in developed economies is expected to contact by -0.1% in 2019. With positive trends in consumer and construction sectors, the effects of the contraction in the automotive industry have been mitigated. 2020 demand in these economies is expected to grow by 0.6%, due to some technical rebound.
Steel demand in developing economies
While growth in developing countries is expected to slow down 0.4% in 2019 due to economic contractions in Latin America, MENA, and Turkey, demand is expected to grow to 4.1% in 2020, mainly due to infrastructure investments in Asia. Chinese steel demand, however, is showing significant growth (attributed to strong real estate investments). However, due to unresolved trade tension, worldsteel expects the Chinese economy to worsen as we move into 2020. With that being said, given the possibility of stimulating consumer purchasing power, Chinese steel demand is still expected to grow 1.0% in 2020.
Construction
In the global construction sector, growth is expected to slow down to 1.5% this year, and 1.2% in 2020, after its 2.8% growth in 2018. US construction remains weakened in 2020, after a slow 2019. European construction, while still growing, is expected to slow down due to weakened economic policies and construction capacity. Japanese construction remains stagnant with reduction in residential construction offset by civil engineering projects. Korean construction continues to slow down, despite public efforts to stimulate it.
In developing countries, construction is expected to grow. Chinese construction is expected to expand thanks to its real estate sector this year, but will soften in 2020. In ASEAN and India, active investment in infrastructure projects is expected to drive growth in construction.
Similar to the global trend, construction in Turkey is expected to contract in 2019, and show a moderate rebound in 2020. Similarly, growth in constructing in Latin America is restricted by the political and budgetary issues.
Automotive
With automotive recession continuing in some of its major markets, the global automotive production is expected to contract further in 2019. Market saturation, purchasing reductions, promotions, and consumer hesitancy have contributed to the contraction. In addition, the shift to fully-electric vehicles contributed to the fluctuation of demand.
Most significant declines have been seen in Germany and China. Passenger car production has declined by -10.6% and -13.8%, respectively, for the first eight months of 2019. Chinese efforts to boost sales of new energy cars in 2020 could help this industry recover. US automotive market, however, is not expected to grow in 2019 and will grow only slightly in 2020.
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