Message from Secretary General_April 2017

Posted on 11 May 2017

Source: SEAISI

Two recent reports released by the World Steel Association (worldsteel) pointed to a continuing recovery of the global steel industry.

In its April 2017 Short Range Outlook (SRO), worldsteel projected that global steel demand will grow by 1.3% year-on-year to 1.535 billion tonnes in 2017, and increase by 0.9% year-on-year to 1.549 billion tonnes in 2018.

All regions in the world, outside of China, are expected to see modest growth in steel demand. The EU will likely see a 0.5% year-on-year increase in steel demand this year to 158.2 million tonnes, and the demand will further rise by 1.4% year-on-year to 160.4 million tonnes in 2018. The three NAFTA countries, i.e. USA, Canada and Mexico, are expected to perform better, with steel demand rising by 2.2% year-on-year to 135.2 million tonnes in 2017, and by 2.4% year-on-year to 138.5 million tonnes in 2018.

The CIS region is forecast to return to steel demand growth after experiencing a 4.1% year-on-year decline in 2016. The region’s steel demand is expected to increase by 3.2% year-on-year to 50.2 million tonnes in 2017 and to 51.9 million tonnes in 2018. The Middle East region is also expected to see its steel demand increasing by 3.1% year-on-year to 54.8 million tonnes in 2017 and by 3.7% year-on-year to 56.8 million tonnes in 2018.

As for Asia and Oceania, the region is projected to see a slight pick-up in steel demand in 2017, by 1.3% year-on-year to 1.016 billion tonnes,  but  demand  will  dip  marginally,  by 0.1% year-on-year to 1.015 billion tonnes in 2018.  China, the dominant producer in the region and the world, is expected to see its steel demand staying flat year-on-year at 681 million tonnes in 2017, and then decline by 2% year-on-year to 667.4 million tonnes in 2018.

South Korea is another country in the region that will see its steel demand retreating over the next two years. The country’s steel demand is projected to decrease by 2.7% year-on-year to 55.5 million tonnes in 2017 and continue to drop by 1.8% year-on-year to 54.6 million tonnes in 2018.

The other two major steel producing countries in the region, i.e. India and Japan, are expected to see contrasting performance in steel demand growth over the next two years. India is expected register strong 6.1% and 7.1% year-on-year increases in 2017 and 2018 respectively. The country’s steel demand is projected to reach 94.9 million tonnes in 2018, a stone’s throw away from overtaking the United States as the second largest steel consuming country in the world.

Japan’s steel demand growth over the next two years is expected to be lethargic. The country’s steel demand is forecast to grow at a slow 1.2% year-on-year to 63 million tonnes in 2016, and will further decelerate to a 0.6% year-on-year increase in 2018 to 63.4 million tonnes.

Although worldsteel did not provide specific demand growth projections for ASEAN, it maintained that the ASEAN countries are expected to demonstrate solid growth in 2017-18. However, it also cautioned that the region remains vulnerable to currency volatilities associated with US interest rate hikes and dollar appreciation.

Soon after the release of its SRO for 2017 and 2018, worldsteel announced that world crude steel production for the 67 countries reporting to it increased 4.6% year-on-year to 145 million tonnes in March 2017. 

For the first quarter of 2017, world crude steel production reached 410.5 million tonnes, up 5.7% compared to the same period of 2016. The industry’s capacity utilisation rate also improved, increasing by 2.2% year-on-year to 72.7 % in March 2017.

Despite the encouraging news, it is still too early to say that the global steel industry is on track for a full recovery. While the threat of global recession is receding and economic performance across most regions of the world improving, there are still a number of geopolitical developments such as Brexit, the uncertainties linked to possible protectionist policies by the United States, and the ongoing conflicts in the Middle East, that are areas of concern. Additionally, the situation of the steel industry in China, with its oversupply situation and the expected slowdown in infrastructure investment and the housing market, could pose further uncertainties to the global steel market. The recent steel price decline is a case in point.


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