Global steel demand will decrease by 0.8% to 1.4 billion tonnes this year following a 3% contraction in 2015. World steel demand, however, will return to growth of 0.4% and will reach 1.49 billion tonnes in 2017, according to the World Steel Association’s 2016-17 short-range outlook.

TV Narendran, chairman of the worldsteel economics committee, said that China’s slowdown was having a global impact on the steel industry and was a key contributor to market volatility and sluggish growth. The global steel market, he said, was suffering from insufficient investment expenditure and continued weakness in the manufacturing sector.

Narendran said that 2016 will be another year of slow growth, but that growth is expected in the NAFTA and EU regions of the world. “Growth for steel demand in all markets except China is expected in 2017,” he said.

However, worldsteel cited the Chinese real estate market, corporate debt, financial market anxiety, high household debt, volatile capital flows in emerging economies, geopolitical tensions and unstable political situations as potential negative risks to its forecast.

Taking China as one of the key potential pitfalls to the worldsteel forecast, the economy there continues to decelerate. The slowdown in China is being made worse by a severe depression in the construction industry and a recovery is unlikely in the near future. Steel demand in China is expected to be down 4% this year and 3% in 2017.

As for the emerging economies, they continue to perform below expectation. Brazil and Russia, claims worldsteel, are struggling with internal and structural issues. Steel demand in both countries is expected to contract strongly.

Low oil prices are making India's prospects brighter while in Turkey steel demand is expected to grow by 3.3% this year and by 3.2% next year. Pro-growth economic policies and low oil prices are behind growth in demand.

In the ASEAN countries of Thailand, Malaysia, Vietnam, Indonesia and the Philippines, steel demand is expected to maintain a growth rate of about 6%.