BRUSSELS: Global steel demand growth is expected to slow to 1.6 per cent next year, after strong growth in 2017 driven by demand from top consumer China, the World Steel Association (worldsteel) said on Monday.

Demand will reach 1.648 billion tonnes next year, up from 1.622bn tonnes this year, worldsteel said. The 2017 figure corresponds to nominal growth of 7 per cent and underlying growth of 2.8 percent.

“The risks to the global economy ... have to some extent abated. We see the best balance of risks since the 2008 economic crisis,” worldsteel said in a statement at its general assembly in Brussels.

However, it added: “In 2018 we expect growth to moderate, mainly due to slower growth in China.”

The steel industry, worth about $900bn a year, is a gauge of the world’s economic health. Average global prices have climbed some 50pc since the 12-year lows of December 2015, according to consultants MEPS.

China this year closed most of its outdated and in many cases illegal induction furnaces, a category not previously captured in official demand statistics, hence the one-off effect on nominal versus underlying demand.

Worldsteel expects demand in China to reach 765.7 million tonnes this year and next. The 2017 figure corresponds to nominal growth of 12.4pc this year and underlying growth of 3pc, worldsteel said. Next year, however, China’s demand will be flat.

Worldsteel, which represents more than 160 steelmakers accounting for 85pc of global production, had forecast in April that global demand would grow just 1.3pc in 2017 and 0.9pc in 2018.

“Progress in global steel markets this year to date has been encouraging. We have seen the cyclical upturn broadening and firming ... ” said T.V. Narendran, chairman of the worldsteel Economics Committee.

Future prospects are less encouraging, though, especially in the longer term.

Published in Dawn, October 17th, 2017