Steel demand in emerging economies face several challenges, says worldsteel

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Worsening external environment in the form of weak exports, low commodity prices, capital outflows and currency devaluation are posing challenges to emerging economies where steel demand continues to be below expectation, the World Steel Association (worldsteel) said in its latest short range industry report.

Geopolitical and internal national political tensions in many emerging economies posed further challenges, it said.

Brazil and Russia are struggling with their internal and structural issues, the report said, adding that steel demand in both economies is expected to contract strongly in the period ahead.

“In particular, the Brazilian economy with its political uncertainty has resulted in a severe contraction in steel demand of -16.7 percent in 2015 and will contribute to a contraction of  -8.8 percent in 2016 with a recovery of only 3.1 percent in 2017,” worldssteel said in a statement.

India’s prospects are brightening due to low oil prices, the reform momentum and policies to increase infrastructure and manufacturing output. India’s steel demand will increase by 5.4 percent in both 2016 and 2017 reaching 88.3 Mt in 2017, it said.

In Turkey, steel demand is expected to grow by 3.3% in 2016 and 3.2% in 2017, supported by the government’s focus on pro-growth economic policies and low oil prices.

According to worldsteel, demand in the ASEAN 5 (Thailand, Malaysia, Vietnam, Indonesia, Philippines) is also expected to maintain a growth rate of around 6% despite their exposure to China due to their infrastructure building activities and will reach 74.6 Mt in 2017.

Steel demand in the emerging and developing economies excluding China is forecast to grow by 1.8 percent and 4.8 percent in 2016 and 2017 respectively. Steel demand in these economies will amount to 457.1 Mt in 2017, accounting for about 30 percent of world steel demand, worldsteel said.

While developed economies are also feeling the effect of the worsening global economic environment, they are expected to maintain a stable recovery momentum. Steel demand in the developed economies will grow by 1.7 percent in 2016 and 1.1 percent in 2017, the report said.

In the EU, a mild recovery in steel demand continues with generally improving economic sentiments and investment conditions. However, uncertainties in the political landscape related to the refugee crisis and Brexit raises risks to the improving economic condition. Steel demand in the EU is forecast to grow by 1.4 percent in 2016 and a further 1.7 percent in 2017, it added.

In the US, steel demand is dampened by the fall in oil prices and a strong dollar, but an improving job market and a robust housing sector will support steel demand. Steel demand in the US is expected to grow by 3.2 percent in 2016 and 2.7 percent in 2017.

 

 

 

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