Worldsteel Short Range Outlook Optimistic for Steel Demand

“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,” commented Al Remeithi, chairman of the worldsteel economics committee. “In the rest of the world, steel demand slowed in 2019 as uncertainty, trade tensions and geopolitical issues weighed on investment and trade.”

Manufacturing was one of the poorest performing sectors for many countries, said Remiethi, particularly in the automotive industry. Construction has maintained positive momentum although demonstrating some slowing.

China steel demand benefited from a strong real estate sector that is forecast to cool in 2020. China GDP is expected to be the lowest since 1992 due to a slowing economy and trade tensions that will likely get worse in late 2019 and 2020, reports worldsteel.

Developed vs. Emerging Economies

Steel demand in developed economies is expected to contract 0.1 percent in 2019 as manufacturing faces a deteriorating export and investment environment. Conditions will improve in 2020 resulting in growth of 0.6 percent.

Steel demand in emerging economies, excluding China, is expected to slow to 0.4 percent in 2019 due to contractions in Turkey, MENA and Latin America, but rebound to 4.1 percent in 2020 as infrastructure picks up, especially in Asia.

Construction

The global construction sector’s growth will slow to 1.5 percent in 2019 and 1.2 percent in 2020 after growth of 2.8 percent in 2018, predicted worldsteel. Construction in the U.S. is expected to weaken in 2019 with no recovery expected in 2020. Growth is expected to continue in European economies, but to slow down due to “weakening economic fundamentals and constraints in construction capacity.” Investments and energy, transportation and communication networks will be the drivers for the sector.

Automotive

Automotive production has decreased globally with contraction expected in 2019 and little to no improvement in 2020. Besides weak global economic conditions, worldsteel cited market saturation, reduced incentives and buyer hesitation as the industry transitions from gas-powered to electric-powered vehicles.

Mechanical Machinery

The effect of a decelerating global economy and trade tensions has hurt investment activities that will result in flat conditions for the mechanical machinery sector in 2020. Energy-related machinery is expected to see a boost, while construction machinery declines in 2019 and 2020. Infrastructure spending in developing economies will partially offset the decline, predicted worldsteel.