Developments in the Steel Market

Developments in the Steel Market

Steel is usually used by the industrial sector and the demand for steel often leads the cycle in industrial production. The demand for steel grew only during the year of 2016, In the initial 10 months of 2016, the monthly consumption indicator for the major steel-consuming economies increased by approximately 1.9% There is an improvement in the market and demand for steel is expected to increase this year and possibly in the coming few years, according to the market analysts. This shows expectations of expansion of fiscal policy by the new US Administration, including corporate and personal tax cuts and actions to raise steel-intensive infrastructure investment. Major energy project are also being expedited, and the recent revival of two major oil pipeline projects would add demand for steel tubular goods. Canada‚Äôs recent approval of energy pipeline projects will also support demand and production of the country’s steel sector going forward.

In India steel demand has increased in a favorable manner being nearly double over the past decade or so. Steel demand has increased nearly 5% per annum in the last few years, supported by the infrastructure and a series of consumption and investment-boosting reforms, including the “Make in India” initiative which has led to increased FDI. In the recent months the demand for steel may have been effected due to the cash shortage associated with the move to demonetize certain currency notes, but strong GDP growth in the fourth quarter of 2016 suggests that the effects may have been more muted than expected. Over the longer term, steel usage will continue to grow to be a favorable one in India, with per capita consumption converging towards higher world average levels . Within Asia, demand growth has been fastest in economies located in Southeast Asia. A report that was released by the South East Asian Iron and Steel detailing Institutes in March 2017, shows that ASEAN steel demand expanded by almost 13% in 2016, rising to a level of 78 million tonnes. Most economies in the region have posted a double-digit steel demand growth, but Vietnam had the highest growth at 20%. That country’s steel association expects significant growth in steel production over the long term, as local producers try to meet steel demand for infrastructure and to support economic development more broadly. Indeed, the country has one of the fastest growth rates in Asia (capacity has nearly doubled in the last four years).

The steel demand developments have been affected in Japan, that reflects a sluggish investment in industrial, electrical and other machinery. Following a decline of 8% in 2015, apparent steel demand has remained stable in 2016, with steel orders up in the construction sectors (particularly civil engineering) and industrial machinery and equipment’s. The output from the industries has also started to recovering in early 2017, and steel demand is expected to recover in line with improved economic prospects. In Ukraine, the mining and steel industry has undergone considerable disruptions as a result of the conflict. The economy of different country having started to recover from the deep recession, and production from industries having shown signs of recovery in late 2016 and early 2017, steel market conditions should improve somewhat going forward.