Global steel demand will reach 1,657.9Mt in 2018, an increase of 3.9% when compared with 2017, according to the World Steel Association’s (worldsteel) October short-range outlook. In 2019 global steel demand is forecast to grow 1.4% to reach 1,681.2Mt.

Saeed Ghumran Al Remeithi, chairman of the worldsteel economics committee and CEO of Emirates Steel, speaking at the World Steel Association General Assembly in Tokyo, commented: “In 2018, global steel demand continued to show resilience supported by the recovery in investment activities in developed economies and the improved performance of emerging economies.”

Demand for steel is expected to remain positive into 2019, Mr Al Remeithi said, growing at 1.4% globally.

There are, however, a number of uncertainties from tensions in the global economic environment.

According to worldsteel, while the strength of steel demand recovery seen in 2017 was carried over to 2018, risks have increased. Normalisation of monetary policies in the USA and the European Union could influence the currencies of emerging economies.

In China, steel demand growth is expected to decelerate due to an absence of stimulus measures. Demand was boosted during H2 2018 by a mini stimulus in real estate and a strong global economy. However, worldsteel argues that continued economic rebalancing efforts and toughening environmental regulations will lead to a deceleration in steel demand towards the end of 2018 and 2019.

Downside and upside risks exist for China, with the former coming from ongoing trade frictions with the USA in addition to a decelerating global economy. “However, if the Chinese government decides to use stimulus measures to contain the potential slowdown of the Chinese economy in the face of a deteriorating economic environment, steel demand in 2019 will be boosted,” claims worldsteel.

In the developed world, steel demand remains healthy, but growth will be moderate. Worldsteel estimates that demand will increase by 1% in 2018 and 1.2% in 2019.

Strong consumer spending and business investment in the USA, supported by tax and regulatory changes and fiscal stimulus, has led to strong steel demand growth in 2017. Steel demand growth in 2019 will slow as car manufacturing and construction activity is expected to see modest growth.

The manufacturing sector is expected to perform well thanks to the strength of the machinery and equipment sector, claims worldsteel.

In the European Union, steel demand will continue its broad recovery at a reduced pace. Business confidence is high and investment and construction is continuing its recovery, says worldsteel. The automotive market may see slower growth demand.

While the economic fundamentals of the EU economy remain relatively healthy, according to worldsteel, steel demand in 2019 will show some deceleration over 2017-18 growth and this is due to global trade uncertainty.

In Japan, steel demand will remain stable thanks to supportive factors on investment (record-high corporate earnings, the continuation of monetary easing, demand associated with the Tokyo Olympics and the increasing need for labour-saving investments).

With major steel using sectors struggling, steel demand in Korea will contract further in 2018 with only a minor recovery expected in 2019.

India’s steel demand is expected to revert to a higher growth track, supported by improving investment and infrastructure programmes, but government finances and corporate debt weigh heavily on the outlook.

In the ASEAN region, sluggish construction activity and stock adjustments have led to slow growth in steel demand, says worldsteel. However, infrastructure programmes in 2019 and beyond will revive that growth momentum. There are risks, and they are largely related to rising trade tensions between China and the USA along with currency volatilities and political instability.

In the remainder of emerging and developing economies, the recovery has been slow to gain traction, says worldsteel, due to rising uncertainty in domestic and external environments. Structural reforms, financial market vulnerability and potential currency pressures from tensions in the global economy are among the main reasons.

Gulf Co-operation Council (GCC) countries are experiencing an upward momentum in steel demand, thanks to reforms and a stronger oil market. The outlook for Iran is less favourable because of sanctions reinstated by the USA.

Even with the rise in oil prices, growth in steel demand in Russia is expected to slow weak momentum, while in Turkey it is expected to contract this year because of the country’s currency crisis. Government stabilisation measures, however, and a consequent return to the competitiveness of the manufacturing sector will aid recovery in 2019.

In Latin America steel demand is continuing its second year of recovery backed by positive developments in the domestic and global economy. In Brazil, demand continues its stable recovery this year and this is expected to continue into 2019. In Mexico demand has suffered from uncertainties related to the renegotiation of NAFTA and the resultant signing of the USMCA. A slow recovery is expected for Mexico during 2019.

In the emerging economies, steel demand is expected to grow 3.2% and 3.9% in 2018 and 2019 respectively (excluding China).

Steel demand in developing Asia (also excluding China) is expected to increase by 5.9% and 6.8% in 2018 and 2019 respectively.

Construction sector growth in developed economies will moderate after what worldsteel calls a ‘strong recovery momentum in 2017-18 due to a high base and rising interest rates. Conversely, in most developing economies, construction activities will continue to grow, notably in India, ASEAN and MENA. Brazil’s construction sector has yet to recover from its deep crisis.

Rising fuel prices and interest rates in developed economies are softening growth in the automotive sector, but in developing nations automobile demand continues to grow at a healthy pace. The EU and US machinery sector continues to be supported by a strong business investment pace.

Downward pressures are building amid rising uncertainty, concluded Mr Al Remeithi. He said that the global economy seemed to have peaked and that trade tensions and currency volatility characterised the situation at present, which could speed up and sharpen down. Risks, he said, were skewed towards the downside and steel intensity is falling despite stable investment growth.