Global steel demand will expand by 0.7% in 2019, slowing from 1,8% in 2018 as China has reached to the end of its industrial growth path, said Edwin Basson, Director General of worldsteel, in an interview with Steelmint on the sideline of the SEASI conference in Jakarta this week. The growth for 2018 will also be much slower than 4.7% registered in 2017, according to data from worldsteel.
The Brussel-based organization forecasts global steel demand will reach 1,626.7 million metric tons (MMT) in 2019, from 1,616.1 MMT this year.
Their needs for industrial development, and specifically, their needs for infrastructure development are still there, it’s still growing, but growing slower than the past,” said Basson. “So overall steel demand is becoming less, but it won’t be much,” he said, adding that China’s steel demand is forecast to decrease by about 14.5 Mt in 2019.
China’s steel demand is expected to remain stable and that the current social inventory and corporate inventory of steel are at relatively low levels, Qu Xiuli, vice president of the China Iron and Steel and Steel Association said at the International Conference on China’s Steel and Financial Derivatives held on June 21-22.
China’s use of finished steel products will reach 736.9 MT this year, unchanged from 2017. But in 2019, the country’s consumption is forecast to slide by 2% to 722 MT of finished steel products, according to data from worldsteel.
Long-term outlook
Slowing consumption of steel is forecast to persist in a long term of the next 20 years because of the reverse industrialization in many developing economies and the process of reusing and re-manufacturing, which mean it will keep the existing output in circulation for longer period, said Basson. This may depress global steel demand, he said.
It’s not because people want to use less steel, but because the existing steel will stay in circulation longer before it’s recycled,” said Basson. “As long as it remains in circulation, it pushes back the new demand,” he added.
As the growth of steel use in the future is expected to be slower than in the last two decades, Basson suggested that countries should consider and look at their industrial system before making a new plant.
“It’s an important understanding to have for many governments,” Basson said. “Because if they don’t realize this fact, they will continue to build steel companies on the principle of growth of the past and the future growth will look different than the growth in the past,” he said, adding that countries should rather think about what will the impact of steel use on their economies.
Global crude steel production climbed to 1,689 million tonnes in 2017, from 1,627 million tonnes in 2016, according to data from the World Steel Association. At the same period, apparent steel use rose to 1,587.4 million tonnes, from 1,516 million tons in 2016.