Commenting on the forecast, Mr. Al Remiti, Chairman of the World Steel Association’s Market Research Committee, said: “In 2019 and 2020, global steel demand is expected to continue to grow, but the growth rate will decline as the global economy slows. The uncertainty of the trading environment and the volatility of the financial market have not yet abated, or will bring downside risks to the current forecast results."

Global steel demand continues to grow

In 2018, global steel demand increased by 2.1% (this value is obtained after considering the impact of China's shutdown of intermediate frequency furnaces on statistical data-see the results of short-term steel demand forecast released in October 2018), and the growth rate is slightly Lower than 2017. In 2019 and 2020, despite the severe global economic environment, global steel demand is expected to continue to grow. China's economic slowdown, global economic growth slowdown, uncertainty brought about by trade policies, and changes in the political landscape in many regions may weaken business confidence and affect investment growth.

China's steel demand remains strong despite government stimulus measures

Under the dual influence of economic restructuring and trade tensions, China's investment growth has slowed down, manufacturing performance has been weak, and steel demand growth will continue to slow down. The moderate stimulus policies introduced by the Chinese government effectively alleviated the economic slowdown in 2018. In 2019, the Chinese government may increase stimulus, and steel demand is expected to be boosted.

In 2020, as the stimulus gradually weakens, China's steel demand will decline slightly.

Steel demand in advanced economies will be affected by the deteriorating trade environment

Steel demand in advanced economies increased by 1.8% in 2018 after a strong growth of 3.1% in 2017. Affected by the deteriorating trade environment, it is expected that the growth rate of steel demand in 2019 and 2020 will slow to 0.3% and 0.7%, respectively.

From 2017 to 2018, under the influence of the fiscal stimulus measures introduced by the US government, the US economy has grown strongly, business confidence is high, and employment is strong. US steel demand has also benefited as a result. With the gradual weakening of fiscal stimulus and the normalization of monetary policy, the growth rate of the US economy is expected to slow in 2019. Growth in the construction and manufacturing industries is expected to slow down. Investment in oil and gas exploration is also expected to slow down, and infrastructure spending is not expected to increase.

The EU economy is facing risks from the deteriorating trade environment and the uncertainty of Brexit. It is predicted that the growth of steel demand in major EU economies (especially those with high export dependence) will slow down in 2019. It is expected that steel demand growth will improve in 2020, which will depend on the easing of trade tensions.

In 2018, Japan's steel demand achieved growth, mainly due to the favorable investment environment, the continued activity of the construction industry, and the increase in consumer spending before the consumption tax increase. In 2019 and 2020, despite the support of public projects, due to the dual slowdown of the construction industry and export growth, steel demand may decline slightly.

Since 2017, South Korea’s steel demand has continued to shrink due to weaker demand in the two main steel industries, shipbuilding and automobiles. Due to the upgrading of real estate market regulation and the deterioration of the export environment, steel demand is expected to continue to decline in 2019, and a moderate recovery is expected in 2020.

Steel demand in developing economies (except China) is expected to grow, but the situation is mixed

Steel demand in emerging economies (except China) is expected to grow by 2.9% and 4.6% in 2019 and 2020, respectively.

Asia

After experiencing the double impact of the abandonment order and the implementation of the Goods and Services Tax (GST), the Indian economy is currently expected to resume rapid growth in the second half of 2019 after the general election. Although the fiscal deficit may put pressure on public investment to a certain extent, the continued advancement of a series of infrastructure projects may support the growth of steel demand by more than 7% in 2019 and 2020.

It is estimated that in 2019 and 2020, the steel demand of developing countries in Asia excluding China will increase by 6.5% and 6.4%, respectively, becoming the fastest growing region in the global steel industry. In the ASEAN region, infrastructure construction will support the demand for steel.

Middle East and North Africa

The member states of the Gulf Cooperation Council (GCC) continue to respond to the low oil price environment with their economic diversification efforts, but fiscal austerity is still curbing construction activities. It is expected that steel demand will continue to shrink in 2019, and a slight recovery is expected in 2020.

The Iranian economy is in recession due to the resumption of sanctions by the United States, and Iran's steel demand will also decline in 2019.

With the strong recovery of the Egyptian economy following structural reforms in 2017, the situation in North Africa is improving. Energy investment and the recovery of the real estate market are expected to drive Egyptian steel demand. It is expected that other North African economies will also be supported by strong investment activities, and steel demand is expected to show a growth trend.

CIS and Turkey

Despite rising oil prices, Russian steel demand growth will continue, but it is expected to be constrained by structural issues. Supported by domestic consumption, Ukraine's steel demand growth prospects are stable and gradually improving.

The Turkish economy is still affected by the currency crisis in August 2018, and steel demand has shrunk. This trend is expected to continue into 2019 and stabilize in 2020.

Latin America

Despite internal and external uncertainties, the full recovery of steel demand in Latin America is expected to continue. The Brazilian economy has recovered for three consecutive years, and the construction industry is expected to improve slightly in 2019. On the other hand, due to weak mining investment, fiscal budget constraints, policy uncertainties and the slowdown of the US economy, it is expected that the growth of steel demand in Mexico will be moderate.

The political situation in Venezuela and its impact on steel demand in the region are still unclear.

Automobile steel and construction steel

With the suppression of auto demand and the gradual weakening of government stimulus measures, the growth of the auto industry in many countries has slowed sharply in 2018, especially the European Union, Turkey and China. The largest declines were in Turkey (-9.0%) and the United Kingdom (-5.5%). Affected by this, the growth rate of global automobile production dropped from 4.9% in 2017 to 2.2% in 2018. In 2019, the growth rate of global automobile production will continue to slow to 1%, and it is expected to stabilize by 2020. However, in Latin America, especially Brazil, auto production will buck the trend and continue to show a steady rebound.

The growth momentum of the construction industry in developed economies is also expected to slow down slightly, but the rebound in the growth of the construction industry in developing economies is expected to maintain global growth at 3% in 2019-2020. However, in China, Turkey, South Korea and Argentina, the construction industry is expected to continue to shrink in 2019. With weak investment and deteriorating trade environment, it is expected that the global machinery industry will continue to decelerate, which will continue until 2020, and the growth deceleration will be more prominent in major producing countries such as Germany, Japan and China.

Editor's note:

The World Steel Association is one of the world's largest and most active industry associations, with members all over the world's major steel-producing countries. World Steel Association members cover iron and steel production enterprises, national and regional iron and steel industry associations and iron and steel research institutions. The crude steel output of its members accounts for about 85% of the global crude steel output.

The results of the short-term steel demand forecast (SRO) include forecast reports, estimated values, and other information. Although these forward-looking results represent our current judgment on future steel demand, the forecast results are subject to risks and uncertainties. There are major differences with actual steel demand. We remind readers not to rely too much on these forward-looking results. The current forecast results only represent the views of the World Steel Association on the date of this forecast.