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Nerves of Steel: Views from the C-Suite



US steel end-markets strong approaching 2018: AISI chief

By Justine Coyne, associate editor, and Christopher Davis, content director, EMEA Metals


Overall steel end-use markets in the United States look strong heading into 2018, according to Washington-based American Iron and Steel Institute President and CEO Thomas Gibson.


Automotive demand likely reached its cyclical peak last year and is backing off a bit, but it's important to keep the downturn in perspective, Gibson said, speaking with S&P Global Platts on October 16 at the World Steel Association's (worldsteel) general assembly in Brussels.


"Autos are backing off from an all-time high to still a fairly healthy level," Gibson said.


What's unknown at the moment is how the recent hurricanes that hit Texas and Florida might impact automotive demand, Gibson said.


"A significant number of cars are going to have to be replaced," Gibson said, noting this could support stronger steel demand from the automotive sector.


Construction demand in the US also looks good heading into 2018, Gibson said. "It hasn't recovered to pre-recession levels, but it is recovering nicely so we're seeing a fairly strong housing market and we're seeing a fairly strong non-residential construction market," he said.


Additionally, an uptick in public infrastructure spending could go a long way in helping to increase steel demand, he said. "We're still working off the re-authorization that was done a few years ago that basically flat-funded highway programs but we're waiting for the Trump infrastructure bill for the big infusion of funds," Gibson said.



STEEL DEMAND RISING GLOBALLY


Gibson’s upbeat take on steel demand in the US also applies to most other countries. In fact, global steel demand will grow by 7% to a little more than 1.622 billion mt this year, according to worldsteel’s short-range outlook.


And looking to 2018, worldsteel expects demand to reach about 1.648 billion mt -- a 1.6% increase.


Steel demand, finished steel (million mt)


The forecast, delivered October 16 during the organization's general assembly, included a caveat. China has closed most of its outdated induction furnaces this year, and the category was generally not captured previously in official statistics. With the closure of those IFs, demand from this sector of the market is now being satisfied by mainstream steelmakers, and therefore, captured in the 2017 official statistics.


As a result, the nominal growth rate for steel demand in China increased 12.4%, or to 765.7 million mt. So, disregarding the statistical base effect, worldsteel said the underlying growth rate of China steel demand will be 3% for this year, which would bring the corresponding global growth rate to 2.8% this year. In 2018, China's demand will be flat at 765.7 million mt.


The overall global demand growth projections follow a 1% year-on-year increase in 2016, when demand was nearly 1.516 billion mt, and a 3% decline in 2015, when global demand totaled more than 1.498 billion mt.


During a media briefing at the event, worldsteel economics committee chairman T.V. Narendran called the expected growth in global steel demand "encouraging," as a cyclical upturn broadened and firmed throughout the year. This led to better-than-expected performance for both developed and developing economies, although the Middle East/North Africa region and Turkey were exceptions.


"Certainly, the industry is looking at slightly better times than we've seen in the last few years," said Narendran, who also serves as managing director of Tata Steel Ltd.


Read more from worldsteel:




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