Steel output has declined in the second half of 2019, but the Australian Govt, Department of Industry, Innovation and Science (IMF) expects production to increse 1pc between 2020 and 2021.

 

The IMF projects global economic growth for 2020 and 2021 at 3.4pc and 3.6pc respectively compared to 3pc in 2019. 

 

Steel output in H2 of 2019 has seen a slack globally with the output dropping lower than 200mn mt in the European Union and around 100mn mt in countries like India, Japan and the US. Growth in Vietnam has been accelerating with steel output increasing by almost a third in the past year. Steelmakers in most countries are ending 2019 with lower profits, tighter margins and negative production trend.

 

Chinese steel demand has been relatively strong and consistent across the year, the IMF indicated. However, it revealed that there have been signs of slowing down in the recent months with China’s fixed asset investment dropping to 5.2pc, a 20-year low. 

 

Industrial production also saw slow growth at 4.7pc year to date until Oct 2019. With steel production easing at 2.6mn mt a day in Oct and with winter production cuts, the Chinese steel production looks unlikely to pick up until March 2020 as per IMF. 

 

Emerging economies like India have become pivotal players in global steel production the department said. Though challenged with tight margins, domestic economic breakdown and global trade tension; 2020 looks brighter for India with steel production likely to touch above 120mn mt. Alternatively, Japan’s steel market has remained fairly consistent across the year with market likely trending upwards in 2020. 

 

The European Union (EU) also saw a decline in steel production by almost 3pc at around 170mn mt in 2019. The European market has gradually seen some upward trends in the automobile sector that could help the steel sector in 2020, the IMF said. The US has also seen a drop in steel production trending just above 80mn mt in the recent months of 2019 due to US-China trade wars and lower automotive production. Nevertheless, US steelmakers have been more resilient and profitable compared to the EU.

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