The World Steel Association projects that global steel demand will increase by 0.5 percent in 2017 to 1,510 million tonnes (Mt).
Demand increased slightly in 2016 but weakness in investment globally is hampering a stronger recovery, worldsteel noted in its steel market forecast for 2017.
Steel demand is projected to decline by -2.0 percent in China in 2017 but will start a moderate recovery in Brazil after two consecutive years of double-digit contraction, according to worldsteel. The association projects demand to expand by 4.0 percent in emerging and developing (excluding China) economies and by 1.1 percent in developed economies.
In 2016, world crude steel production increased by 0.8 percent to 1,628.5 Mt, worldsteel reported in its most recentsteel market update.
Annual steel production increased by:
- 7.0 percent in the Middle East;
- 2.1 percent in Australia/New Zealand;
- 1.6 percent in Asia; and
- 0.8 percent in the CIS.
Production decreased by:
- -10.6 percent in South America;
- -4.4 percent in Africa; and
- -2.3 percent in the EU.
North American production remained flat from 2015 to 2016 while the US produced -0.3 percent less than in 2015, worldsteel reported. China’s annual output rose by 1.2 percent and its share of world crude steel production increased from 49.4 percent in 2015 to 49.6 percent in 2016.
In December 2016, crude steel production increased by 5.5 percent compared to the previous year. The crude steel capacity utilization ratio of the 66 countries that reported to worldsteel was 68.1 percent in December, 2.8 percentage points higher than in the same period a year ago. The average capacity utilization in 2016 was 69.3 percent compared to 69.7 percent in 2015, according to worldsteel.
Iron ore prices of $80/ton in December were nearly double those of a year earlier, due partially to strong steel demand in China, according to a January 2017 Commodity Markets Outlook from World Bank. “However, prices softened into January, with China’s inventories rising and seasonal demand expected to weaken,” researchers wrote.
World Bank researchers also noted that iron ore exports from Australia and Brazil hit record levels in November and that new low-cost capacity is expected online this year. “These considerations, along with rising scrap supply and an expected slowdown in China’s steel production, are expected to pressure prices downward and force high-cost production to close. Key uncertainties are the strength of steel demand and iron ore production in China,” according to the World Bank report.
Uncertainty related to government measures meant to stabilize China’s decelerating economy will continue to weigh on the steel market, according to a January 2017 Steel Industry Stock Outlook by Zacks Equity Research. “Although the steel industry will remain under pressure for some time, it is certainly expected to grow thereafter on the back of the automotive and construction industries,” Zacks reported.
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