Global demand for finished steel products is forecast to fall 1.7% this year, largely due to an economic slump in China, but should recover in 2016 as demand in both developed and emerging economies grows, the World Steel Association said in its short-range outlook Monday.
Global steel demand is forecast to shrink to 1.51 billion metric tons this year and then grow 0.7% to 1.52 billion tons in 2016. This compares with 0.7% growth to 1.54 billion tons last year, according to the association--whose members contribute some 85% of global steel supply.
The World Steel Association forecast in April that global steel demand would grow 0.5% this year and then 1.4% the following year but the slowdown in China's infrastructure investment and real estate sectors has been more severe than expected, prompting the association to ratchet down its steel demand forecast for the world's largest steel consumer.
Chinese steel demand is now forecast to shrink 3.5% to 686 million tons this year and then fall another 2% to 672 million tons in 2016, having reached peak steel demand in 2013, according to the association. This compares with its April forecast for Chinese steel demand to shrink 0.5% both this year and next.
"It is clear that the steel industry has, for the time being, reached the end of a major growth cycle which was based on the rapid economic development of China," said Hans Jurgen Kerkhoff, chairman of the worldsteel Economics Committee.
"The steel industry is now experiencing low growth which will last for the time it takes for other developing regions of sufficient size and strength to produce another major growth cycle," Mr. Kerkhoff said.
Global steel demand, excluding China, will shrink by 0.2% this year before growing 2.9% in 2016. In emerging economies excluding China, demand will grow 1.7% in 2015 and 3.8% in 2016. Meanwhile steel demand in developed economies is expected to contract by 2.1% this year but grow 1.8% in 2016.
In the U.S., steel demand is forecast to shrink 3% this year due in part to slower investment in the nation's energy sector. U.S. steel demand is forecast to then rise 1.3% the following year.
In the European Union bloc of 28 member states, steel demand is forecast to rise 1.3% this year and 2.2% next year, buoyed in part by low oil prices and low interest rates.
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