Global steel demand to go up by 0.5% in 2015

IN 2016, it is forecast that world steel demand will grow by 1.4% and will reach 1,565 Mt.

Commenting on the outlook, Hans Jürgen Kerkhoff, Chairman of the worldsteel Economics Committee said, “We are releasing a restrained growth outlook for the global steel industry mainly due to the deceleration in China. The outlook also reflects the influence of major structural adjustments in most economies, particularly owing to limited investment growth post 2008. As these changes take effect, the steel industry will experience a slower pace of growth, it will focus on operational efficiencies and on the value that steel products generate for customers and society.”

“While we continue to face some downside risks coming from some parts of Europe – geopolitical instability, international capital flow volatility and the economic slowdown in China – the impact of these risks has come down. We have also started to see some encouraging developments. We hear increasingly positive news from developed economies, especially signs of firming recovery momentum in the Eurozone. In the developing and emerging world, we see increased optimism about India and growth in steel use in some MENA and ASEAN countries. While these developments will not be enough to counterbalance the deceleration of China, we expect to see gradually improving growth prospects beyond 2016,” Kerkoff concluded.

An interesting factor which has become increasingly apparent is that in some developing economies the steel markets are beginning to exhibit the characteristics of mature markets.

The sharp decline in oil prices influenced the forecast, though its impact varies between countries. On the one hand, it has a negative impact on steel demand for infrastructure investments financed from oil revenues; on the other hand it helps business sectors and consumers in oil importing countries, thus creating better growth prospects. As inflationary pressure is alleviated, further relaxation of monetary policy by the Central Banks is possible in countries with high inflation, which will eventually strengthen the recovery of underlying real steel use. As economies adjust to lower oil prices, it may lead to reduced demand for steel in some economies in the short term, but should support economic growth and demand for steel in the medium term.