Steel demand in China will grow by 7.8% to reach 900.1Mt, according to the World Steel Association’s Short Range Outlook (SRO) released today. The rest of the world is expected to record 0.2% growth to 874.9Mt.
The SRO predicts that Chinese steel demand will grow by 1% and that steel demand in the rest of the world will grow 2.5%, driven by 4.1% growth in the emerging and developing economies, excluding China.
For 2019, global steel demand will grow by 3.9% to 1.775 Mt and by another 1.7% in 2020, reaching 1,805.7Mt.
Saaed Al Remeithi, chairman of the World Steel Economics Committee, told the world’s media gathered today at the World Steel Association’s General Assembly at the Quinta Real hotel in Monterrey, Mexico, that Chinese steel demand was showing high growth this year owing to a strong real estate sector and despite the country’s lowest expected GDP growth since 1992.
“China has surprised us,” said worldsteel’s director-general Dr. Edwin Basson.
According to Dr. Basson, the top three downside risks to the global steel industry going forward are based on the uncertainty of the international trade environment. He highlighted growing protectionist notes in a number of countries; government support measures introduced into the construction and automotive industries; and consumer uncertainty.
“In China we have seen interesting support of the construction sector as well as legislation changing the strength of material in building practices. In some South East Asian markets there has been similar support for those moving into urban areas. The risk is if the government turns off the tap quickly, but it’s not likely so when we factor this in, even though we live in a pessimistic environment, if you look at what’s happening on the ground, there is surprising robustness,” Dr. Basson added. “Consumers are waiting for more clarity, more certainty.”
Dr. Yu Yong, chairman of HBIS Group, echoed Dr. Basson’s remarks about the situation in China and said that even though there are tensions between the USA and China at present, the situation is under control.
Despite the global economic situation not being particularly brilliant, Dr. Yong said that steel demand was, nevertheless, robust. He argued that the Chinese economy in 2019 was doing well, with strong figures for steel demand driven by infrastructure spending and government support for the manufacturing sector.
According to Dr. Yong there was still a lot of space for infrastructure investment in China. “The Chinese economy remains resilient and growth will continue as we still have a lot of space to bolster the economy,” he said, acknowledging that there had been a contraction in the Chinese automotive sector, but not because of a slowing down of the economy, more a case of consumer uncertainty.
Saeed Al Remeithi, chairman of the worldsteel economics committee, commented: “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. In the rest of the world, steel demand slowed in 2019 as uncertainty, trade tensions and geopolitical issues weighed on investment and trade. Manufacturing, particularly the auto industry, has performed poorly, contracting in many countires. However, in construction, despite some slowing, a positive momentum has been maintained.”
The global economic outlook, Mr Al Remeithi said, was ‘highly unpredictable’. There were, he said, ‘significant downside risks’ ahead if the current level of uncertainty prevails.