Five key takeaways from Day 1 of worldsteel general assembly

1. Trump is not the US steel industry savior

President Trump’s ascent to the White House was largely lauded by the US steel industry. But worldsteel has forecast US steel demand growth of just 1.1% in 2018, down from 4.8% this year. Nucor chief executive John Ferriola said the industry was “a little bit concerned” that the Section 232 investigation into imports was dragging on, but he insisted confidence remained that 232 would be positive for the local industry. As for the much-mooted $1 trillion infrastructure spend, Ferriola said new infrastructure was sorely needed but the bill had yet to pass and therefore that demand had not been included in the outlook for next year.

2. China’s steel consumption has been drastically underestimated

Worldsteel surprised with its 12.4% increase for Chinese steel demand this year, due to the removal of induction furnace capacity. Much like shadow banking, China’s true steel capacity situation has always been hard to accurately estimate given the size and fragmentation of the industry. Using local, poor quality scrap rather than iron ore meant the demand could not be worked out by calculating Fe units. How long had China harbored ‘ghost’ capacity roughly equivalent to annual US steel production?

3. Emerging nations start to dominate leading consumers table

Next year sees Vietnam take its place for the first time among worldsteel’s Top 10 steel consuming countries, with 27 million metric tons. Along with the Philippines – which could one day join its Southeast Asian compatriot on the list – Vietnam is the major driver of steel demand in the region. Mexico is one place ahead of Vietnam in 9th position, with worldsteel predicting steel demand of 27.6 million mt. Back in 2007, Italy and Spain were both on the list but Germany is the sole European representative in 2018.

4. Technical improvements contribute to subdued demand outlook

Next year all global regions will show positive demand growth, even though the overall outlook is subdued at just 1.6% growth. In coming decades some 1.5 billion people will move from the countryside to cities, generating demand for apartments, cars and appliances. However, steel demand growth will be slower than previously due to stronger and lighter materials, meaning less steel will be needed to do what it did in the past, worldsteel director general Edwin Basson explained.

5. Trade disputes unlikely to fade anytime soon

With one in every three tons of steel produced crossing borders in a world where there is enough installed capacity to supply steel demand for the next 20 years, it is inevitable that trade disputes will remain rife. That trade has to be protected and therefore trade cases are a “natural part” of international business, was the prevailing view at worldsteel. However, unilateral action on trade taken by the US could lead to complaints to the WTO, a ratcheting up of “tit for tat” reprisals and a loss of trade security, one speaker said.

Paul Bartholomew, S&P Global