NEW DELHI, Oct 13: Even as the growth phase in steel sector globally has come to an end and the industry is going through a slowdown, industry body World Steel Association (WSA) expects India to beat the downturn.
Demand in India, world’s third largest steel producer, is expected to grow to 81.5 million tonnes (MT) and 87.6 MT in 2015 and 2016, respectively, from 75.9 MT in 2014, WSA said in a statement.
“Of particular concern is vulnerability of the emerging economies to external shocks though we are also expecting some, like India, to show resilience to the global slowdown,” WSA Chairman Worldsteel Economics Committee Hans Jurgen Kerkhoff said.
On a positive note, the recovery of steel demand in the developed economies, even though the momentum has weakened a little, remains on track, he added.
Kerkoff said: “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.”
Combined with China’s slowdown, the sector also faces low investment, financial market turbulence and geopolitical conflicts in many developing regions, he pointed out.
“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,” Kerkoff said.
Globally, WSA’s Short Range Outlook (SRO) forecasts that global steel demand will fall by 1.7 per cent to 1,513 MT this year, following a growth of 0.7 per cent in 2014.
In 2016, it is pegged to decline by 0.7 per cent to 1,523 MT.
Chinese economy has decelerated as the impact of the rebalancing measures on the investment and real estate sector turned out to be more severe than expected, WSA said.
China’s steel demand is expected to decrease by 3.5 per cent in 2015 and 2 per cent in 2016, following its demand peak in 2013, it added.
There is an increasing risk associated with this economic slowdown and the consequent financial market volatility, which has become a global concern, it said on China’s situation.
Russia and Brazil are experiencing severe contraction in steel demand. Geopolitical tensions and political instability in the Middle East, Africa and Ukraine continue to have a negative effect.
“… Steel demand in India and Mexico and other countries in the ASEAN and MENA regions is expected to maintain growth momentum despite adverse external environment due to positive domestic demand and progress in reform,” WSA noted.
While economic fundamentals in the US continue to remain solid, steel demand is expected to show negative growth in 2015, due to currency appreciation and slowing energy sector.
In the EU, there is a broadening of the recovery momentum aided by low oil prices, low interest rates and a weak euro.
Japan and Korea are expected to show negative growth due to adverse structural forces weighing on their economies. )(PTI)
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