2020 steel demand better than expected forecast
The World Steel Association (Worldsteel) forecasts that global steel demand will grow by 1.7% to 1.81 million tonnes in 2020 but that doesn’t mean that shipping container prices will stay put or will will be cheaper.
That global growth, however, does not reflect strong growth in China and slow growth in the United States, Europe and other developed economies.
Chinese steel demand grew by 7.8% to 900.1 million tonnes in 2019 while the rest of the world growth was 0.2% to 874.9 million tonnes.
That trend is expected to slow in 2020, with steel demand growing by only 1% in China and 2.5% in the rest of the world. The driver of growth in 2020 will be emerging economies outside of China.
Growth in China was driven in large part by its real estate sector, which has seen the steel intensity of new construction increase by approximately 5%. That has helped to offset a “significant slump” in China’s manufacturing sector and a Chinese auto sector that has contacted for 13 months in a row
China – like the rest of the world – has been hurt by trade tensions. The country is unlikely to roll out “substantial stimulus measures” but “selective mild stimuli” in infrastructure and tax cuts aimed at boosting consumer spending should help offset that headwind, Worldsteel said.
North American steel demand growth was by 0.6% to 141.5 million tonnes in 2019 and by another 0.8% to 142.6 million tonnes in 2020. That broadly reflects trends in other developed economies, where growth was expected to slow by 0.1% in 2019 before rebounding by 0.6% in 2020.
Drags include the US construction sector, which was weaken in 2019 and to see “no recovery” in 2020. Construction is also expected to slow or stagnate in Europe, Japan and South Korea on weak economic fundamentals.
Another hit comes from the automotive market, where car production fell by 10.6% in Germany in the first eight months of 2019. The US automotive sector saw no growth in 2019 and only a slight rebound in 2020.
It is also a mixed picture in the developing world, where growth outside of China went slow to 0.4% in 2019 due to weak fundamentals in Turkey, the Middle East and Latin America. It is expected to rebound by 4.1% in 2020 on infrastructure investments, particularly in Asia.
It could have been worse
Middling growth in the US and much of the rest of the world is not much to get excited about. But with prevailing pessimism in steel markets and in geopolitics in general, the showing was stronger than expected.
Despite trade tensions – think Section 232, EU safeguard measures and President Donald Trump’s trade war with China – broader trends continue to benefit steel demand. In Southeast Asia, people are increasingly moving from the countryside into the city, and this has led to a construction boom for steel-intensive apartments and housing.
If there is an impediment to success, it might be consumer spending in developed economies. In the United Kingdom, for example, people are putting off buying and selling homes because of uncertainty over Brexit.
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