Moderate Rise in Steel Demand/Good News for Bulkers

GLOBAL steel demand is set for moderate growth next year, bringing more optimism in dry bulk shipping markets despite a potential Chinese slowdown.

News ID: 76801

Date: 17 October 2017 - 13:32

According to MANA, In its latest short-term outlook, the World Steel Association expects overall demand to reach 1.648bn tonnes in 2018 from 1.622bn tonnes projected this year, a rise of 1.6%, while the figure excluding China amounts to 882m tonnes, an increase of 3% from this year's anticipated 856m tonnes.

The continued increase could be beneficial for seaborne iron ore and metallurgical coal trades, generally on panamax and capesize vessels, as they are key ingredients in the production of steel. Moreover, the slowing demand in China might suggest the world’s top steel-making nation will raise overseas sales to meet healthy demand elsewhere, likely creating incremental supramax demand.

Maritime Strategies International’s senior analyst Will Fray expects a reduction in steel consumption in China by 3%-5% next year versus 2017 as a result of a potential fall in credit supply, but the effect on production is still uncertain and may become clearer following the Party Congress on October 18, when Beijing may announce some policy changes.

The World Steel Association’s economic committee chairman TV Narendran said that global steel demand growth was expected to be “moderate” in 2018 as demand in the rest of the world will “continue to maintain its current momentum”, even as Chinese steel demand will have very little or no growth due to economic rebalancing and environmental protection measures after a 3% rise in 2017.

“However, escalating geopolitical tension in the Korean peninsula, China’s debt problem and rising protectionism in many locations continue to remain risk factors,” he warned in the report.

Looking further ahead, “the lack of a strong growth engine to replace China and a long-term decline in steel intensity due to technological and environmental factors will continue to weigh on steel demand in the future”, he added.