The global steel industry has reached its latest inflection point which is likely to be followed by a prolonged period of slow growth, according to worldsteel data management head Adam Szewczyk.
The global economy is experiencing structural challenges and a slowdown in globalisation, with western liberalism in retreat. There has been a cyclical downturn since late 2018, with US-China trade tensions, Brexit, and geopolitical conflict in the Middle East all dampening investor confidence. Trade tension is hampering global value chains, resulting in slowing trade activity, Szewczyk said at this week’s Irepas meeting in Düsseldorf attended by Kallanish.
In Germany manufacturing is in recession and the automotive industry has contracted, while the decade-long expansion cycle in the US, the longest since the 1950s, is coming to an end. The Chinese economy is continuing its smooth deceleration with rebalancing. Developing Asia continues to be a high-growth region but a quick Turkish economic rebound is unlikely, Szewczyk noted.
According to worldsteel’s latest forecast from April – new data is published only next month – global finished steel demand growth will slow to 1.3% in 2019 and 1% in 2020. The main reason for this is the deceleration in Chinese demand. Chinese GDP growth is expected to be its lowest since 1992. Trade tensions with the US are pressuring Chinese manufacturing, while auto output is contracting, but real estate growth remains strong. In 2020 demand will slow further with no government real estate stimulus.
Despite the Indian market failing to deliver on post-election optimism in 2019, infrastructure and consumption will drive demand in 2020, while ASEAN will continue to be the growth bright spot. “But the growth will not be able to offset the Chinese slowdown,” Szewczyk said.
In 2035 finished steel demand will be below 2 billion tonnes, with average annual growth of less than 1% until then. “You may say that, globally, currently installed capacities are sufficient to meet steel demand till 2035,” Szewczyk concluded.