The World Steel Association (WSA) has released its Short Range Outlook (SRO) for 2019 and 2020. As per the forecasts, global steel demand will grow by 3.9% to 1,775.0 MnT in 2019 and will grow by another 1.7% in 2020, reaching 1,805.7 MnT.
In case of China, WSA has made a forecast that steel demand in the country will grow by 7.8% to reach 900.1 MnT and the rest of the world is expected to record 0.2% growth to 874.9 MnT. In 2020, Chinese steel demand is expected to grow by 1.0%, whereas steel demand in the rest of the world will grow by 2.5%, driven by 4.1% growth in the emerging and developing economies excluding China.
Developing and emerging economies to drive global steel demand
Mr. Al Remeithi, Chairman of the Worldsteel Economics Committee said that while the global economic outlook is highly unpredictable, we expect to see further growth in steel demand in 2020 of 1.7%, with emerging and developing economies excluding China contributing more. However, this forecast faces significant downside risks if the current level of uncertainty prevails.
In 2019, the global steel demand has continued to grow more than the expectations in the ongoing 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 countries, however in construction, despite some slowing, a positive momentum has been maintained.
Real estate drives Chinese steel demand in 2019
Steel demand in China is still expected to grow by 7.8% in 2019, largely driven by real estate investment. In the first seven months of 2019 China’s real estate market reported the strongest performance over the same period for the last five years. Firstly, due to the relaxation of control policies in tier 2 to tier 4 cities and secondly the newly implemented construction standard, put into effect in April 2019, estimated to have increased steel intensity in new buildings by about 5.0%.
WSA expects Chinese economy to worsen in the later part of 2019 and in 2020 the unresolved trade tensions will add further pressure. It is unlikely that the Chinese government will reintroduce substantial stimulus measures as it continues to hold a balance between containing the slowdown and pushing forward its economic restructuring agenda.
Weak manufacturing stagnates steel demand in developed countries
After growing by 1.2% in 2018, steel demand in the developed economies is expected to show a small contraction of -0.1% in 2019. The consumer sectors and construction maintained positive momentum, however manufacturing slumped due to a deteriorating environment for export and investment. In 2020, with the effect of some technical rebound, steel demand in the developed world is expected to grow by 0.6%.
High growth expected in Asia
Growth of steel demand in the emerging economies excluding China is expected to slow down to 0.4% in 2019 due to contractions in Turkey, MENA and Latin America. But the growth is expected to rebound to 4.1% in 2020 due to infrastructure investments, especially in Asia.
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