Smart Recovery

As the world steel outlook turns positive, India offers a glimmer of hope with increasing demand for the vital building material.

- Alireza Moghadam

There is some good news for steel producers around the world. After years of wait, characterised by slowing demand, excess capacity and large inventory, facing headwinds that slowed consumption in recent years, demand growth in world steel is beginning to face a cyclical upturn. Consumption demand is expected to pick up on the back of the momentum in global economic growth. Based on the demand conditions, the World Steel Association (WSA), in its short-range outlook, has forecast that global steel demand will improve to 1,648 million tonnes (mt) in 2018 from an estimated 1,622 mt in 2017.

In 2017, the risk of global recession receding and economic performance improving across most regions, along with several geopolitical changes still created some concern. US policy uncertainties, Brexit, the rising populist wave in current European elections and the potential retreat from globalisation and free trade under the pressure of rising nationalism add a new dimension of uncertainty in investment environments. To balance this, risks from ongoing conflicts in the Middle East and in Eastern Ukraine appeared to be reducing.

In other words, the industry has, by and large, been able to ride out this year's political risks, including the Fed rate hikes, European elections, rising crude oil prices and Trump-induced market volatility. Admittedly, China is the mover and shaker of the world steel market by being the largest producer and consumer of the vital industrial material. Demand for finished steel is variable around the world, but, for the most part, it is forecast to increase this year in most regions.

Demand uptick