Burton Mills - Demand for Steel to Decrease in 2018
26 October 2017
Analysts at Taipei, Taiwan-based investment house Burton Mills believe that the world's demand for steel will slow by 1.6 percent in 2018 after robust growth this year that was driven by demand from China, currently the world's biggest steel consumer.
According to the World Steel Association (Worldsteel), demand for steel will reach 1.648 billion tonnes in 2018 from 1.622 billion tonnes in 2017. This year's figure is in line with the nominal expected growth of 7 percent.
When the World Steel Association convened for its general in Brussels last week, it stated that the risks to the world's economy had to some degree subsided. It added that although we are now seeing the most favorable balance of risks since the devastating financial crisis of 2008, moderate growth is expected for next year.
Burton Mills analysts believe that the moderate growth expected next year will be mainly due to slower growth in China.
The steel industry, which is valued at approximately $900 billion a year, is a measure of the world's overall economic well-being. Average global prices have increased by around 50 percent since the 12-year lows of December 2015.
In 2017, China shut down the majority of its obsolete and, in many instances, unlawful induction furnaces. This was a category that was traditionally not taken into account in official demand data. This explains the one-off effect on nominal and underlying demand.
The Chairman of the World Steel Association stated that progress in the world's steel markets had been encouraging but that future prospects, especially in the longer term, are not as bright.
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