Global steel demand is expected to maintain growth, which will benefit China's steel exports

Release time：May 15, 2019 From：匿名

In the context of slowing economic growth, global steel demand is still expected to maintain growth. The World Steel Association's recently released 2019-2020 steel demand forecast report shows that global steel demand will reach 1.735 billion tons in 2019, an increase of 1.3% year-on-year. In 2020, global steel demand will grow by 1.0% to 1.752 billion tons. This will benefit China's steel exports.

Data show that in the first quarter of this year, China exported 17.03 million tons of steel, up 12.6% year-on-year. This is the first increase after steel exports have declined for three consecutive years. However, the China Iron and Steel Association recently pointed out that the risk of capacity expansion in China's steel industry still exists, reminding industry companies to strengthen self-discipline, rationally control the pace of production, seriously study changes in the international market, and maintain supply and demand balance and market stability.

The World Iron and Steel Association report also mentioned that the slowdown in China's and global economic growth, the uncertainty of the trade environment, and political changes may all undermine business confidence, affect investment growth, and bring downside risks to the market. In 2018, global steel demand increased by 2.1%, slightly faster than 2017. Al Remiti, chairman of the World Steel Association's Market Research Committee, said that global steel demand growth will decline this year and next as the global economy slows. In particular, attention must be paid to the uncertainty of the trading environment and the impact of financial market volatility.

The report shows that steel demand in various markets is clearly differentiated. Among them, China's steel demand is still strong. Although the slowdown in investment growth under the dual effects of economic restructuring and trade tensions will constrain China's steel demand growth, the moderate stimulus policies introduced by the Chinese government have effectively boosted economic growth. In 2019, China’s steel demand will continue to grow under policy. However, in 2020, as the policy stimulus effect weakens, China's steel demand may decline slightly.

Deterioration of the trading environment will significantly affect steel demand in developed economies. In 2017, steel demand in developed economies grew strongly by 3.1%, and in 2018 it increased by 1.8%. World Steel Association believes that due to the deterioration of the trade environment, steel demand growth in developed economies in 2019 and 2020 will slow down to 0.3% and 0.7% respectively.

Specifically, the US economy has benefited from fiscal stimulus measures and has grown strongly, which in turn has driven steel demand. With the gradual weakening of fiscal stimulus and the normalization of monetary policy, the US economic growth will slow down in 2019. As a result, construction and manufacturing growth, oil and gas exploration investment and infrastructure spending are also expected to slow. The improvement in the weak steel demand in the major EU economies depends on the trend of trade tensions. In 2018, demand for Japanese steel increased due to a favorable investment environment, continued construction activity, and increased consumer spending before the consumption tax hike. In the next two years, the support of public projects will not be able to withstand the slowdown in construction and export growth, and demand for steel in Japan may decline slightly. Since 2017, demand for steel in the two major steel industries of shipbuilding and automobiles has weakened, and demand for steel in South Korea has continued to shrink. In 2019, the regulation and upgrading of the real estate market and the deterioration of the export environment will cause South Korean steel demand to continue to decline, and it will recover moderately in 2020.

Demand for steel in developing economies other than China is also expected to grow. It will increase by 2.9% and 4.6% respectively in 2019 and 2020, but the situation is not uniform.

In the Asian market, the demand for steel in developing countries excluding China will increase by 6.5% and 6.4% respectively this year and next, making it the fastest growing region in the global steel industry. The Indian economy has resumed rapid growth in the second half of 2019 after the election. Although the fiscal deficit may put pressure on public investment to a certain extent, the continued promotion of a series of infrastructure projects will support India's steel demand growth of more than 7% in 2019 and 2020. Infrastructure construction in the ASEAN region will also support steel demand.

GCC members are continuing to cope with the challenge of low oil prices with economic diversification efforts, but fiscal austerity is still damaging construction activity, and steel demand will continue to shrink in 2019, with a small recovery in 2020. After the structural reforms, Egypt's economy is recovering strongly, and energy investment and real estate market recovery will drive demand for steel. Supported by strong investment activities, steel demand in other North African economies is also expected to show growth. Despite the uncertainties inside and outside, steel demand in Latin America is expected to continue to fully recover. At the same time, the growth in Russian steel demand will continue.

From the demand for steel in the automotive and construction industries, with the suppression of automobile demand and the weakening of government stimulus measures, the growth of the automobile industry in many countries and regions such as the EU, Turkey and China has slowed significantly in 2018. In 2019, global auto production growth will continue to slow to 1%, and is expected to stabilize by 2020. But in Latin America, especially Brazil, car production will go against the trend and continue to rebound steadily.

The growth of the construction industry in developed economies will also slow down slightly, but the growth of the construction industry in developing economies is expected to keep global growth from 2019 to 2020 at 3%. With weak investment and a worsening trading environment, the global machinery industry will continue to slow down until 2020, and the growth rate of major producers such as Germany, Japan and China will be more pronounced.