Industry

Steel demand weak globally, recovers in India

Steel makers would have been happier with higher international steel prices, but that looks unlikely when demand is so weak.

Steel makers would have been happier with higher international steel prices, but that looks unlikely when demand is so weak.

If China is a critical variable for your forecast, make one at your own risk. The World Steel Association has drastically cut its estimates for finished steel demand in 2015 and 2016.

In April, its Short Range Outlook forecast steel demand to grow by 0.5% in 2015 and then recover to 1.4% in 2016. But its October edition says steel demand could actually decline by 1.7% in 2015 and even then grow by only 0.7% in 2016. In absolute terms, that is 31 million tonnes of steel cut from its earlier demand estimate.

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The 2015 forecast appears reliable as data till date is available. But the 2016 forecast, says the World Steel Association statement, depends on the belief the Chinese economy will stabilize. That is risky as it consumes 45% of global steel, and nobody knows when this super-tanker of an economy will complete its U-turn and start steaming ahead.

What about the rest of the world? No single country has the heft that China has. There was hope that the developed world will grow faster, but World Steel Association says momentum here has slowed. Emerging markets are also in hot water. But there are some bright spots. Among the top 10 consumers, Mexico and Turkey are expected to consume more steel than expected earlier.

More importantly, India’s steel demand has been revised up, by 110 basis points (bps) in 2015 to 7.3% and up by another 30 bps in 2016. One basis point is one-hundredth of a percentage point.

Steel makers would have been happier with higher international steel prices, but that looks unlikely when demand is so weak. Higher domestic demand and some price support from the recent 20% safeguard duty on flat steel is as good as it can get in the foreseeable future.

[“source -livemint”]

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