It appears as though the steel industry is seeing the end of a major growth cycle with the global steel forecast looking pretty gloomy for 2015-2016.
Earlier in the year in 2015 though, the outlook wasn’t as bleak. It seems a lot can change in six months, especially if you compare the World Steel Association’s Short Range Forecast 2015-2016 released in April with the update released in October.
In April 2015, the World Steel Association (Worldsteel) forecasted that global steel demand would increase by 0.5 per cent to 1.54 billion tonnes in 2015, and by a further 1.4 per cent to 1.56 billion tonnes in 2016.
However, in its latest version of the same report released 12 October 2015, Worldsteel forecasted a decrease in global steel demand by as much as -1.7 per cent in 2015.
So, what else does Worldsteel’s Short Range Forecast predict for the year ahead in the steel industry?
Key points in the 2015-2016 steel forecast
- As already mentioned, global steel demand is expected to decrease to -1.7 per cent to 1.51 billion tonnes in 2015, following growth of 0.7% in 2014.
- In 2016, global steel demand will show growth of 0.7 per cent to reach 1.52 billion tonnes.
- Worldsteel’s gloomy growth outlook for 2015-2016 indicates the end of a major growth cycle in the steel industry, which was based on the rapid economic development of China.
- Chinese steel demand in 2014 saw negative growth for the first time since 1995. This downward trend looks set to continue with China’s steel demand expected to decrease by -3.5 per cent in 2015 and -2.0% in 2016.
- Some developing economies are experiencing severe contraction in steel demand, for example Russia and Brazil. Geopolitical tensions and political instability in the Middle East, Africa and Ukraine continue to have a negative effect too.
- On the other hand, steel demand is expected to maintain growth momentum in India, Mexico and other countries in the ASEAN and MENA regions.
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Source: World Steel Association, Short Range Outlook 2015-2016 (12/10/2015)