After the healthy growth in steel demand in 2018, world’s largest steelmaker Arcelor Mittal has forecasted only a marginal pick-up in demand for 2019. The company said that it expects the global steel demand to grow only between 0.5 to 1% this years against an increase of 2.8% in 2018.
Brazil will have the highest growth rate in steel demand
According to the company forecasts, the most rapidly developing market in terms of steel demand would be Brazil with a growth of 3.5 to 4.5% although in 2018 the country’s demand grew by 7.3%. Steel demand in ArcelorMittal’s main markets, Europe and the United States, would grow by respectively 0.5-1.0 and 0.5-1.5%, lower than last year.
ArcelorMittal is investing in projects in Mexico and Brazil. It has also bought Italy’s Ilva, Europe’s largest capacity steel plant, and is close to completing the acquisition of Essar Steel, a deal that would see it entering the high-growth Indian market.
China, U.S., and Europe to experience demand weakness
In case of world’s largest steel producing country, China, ArcelorMittal expects a drop by 0.5 to 1% in steel demand against a growth of 3.5% in 2018 and demand weakness in the U.S. and Europe amid macro-economic risks and persistent oversupply. Besides relatively stable demand from automotive and construction in China, the country’s demand is anticipated to be offset by declining machinery output.
China’s steel industry saw bumper profitability in the past two years following upgrades and capacity cuts that were launched after a 2015 price crash. However, record margins started to decline late last year due to safeguard measures in the U.S. and European Union, as well more than forecasted slowdown inside China.
The company said it expected its steel shipments would increase, boosted by operational improvements. Capital expenditure would increase to USD 4.3 billion from USD 3.3 billion in 2018. The company reported fourth-quarter EBITDA of USD 1.95 billion, a 9% decline from a year earlier and its net debt at the end of 2018 was at USD 10.2 billion, slightly down from the USD 10.5 billion at the end of the third quarter.
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