Worldsteel’s Forecasts for 2018-19: Iran Steel Demand to Surge 5 Percent

EghtesadOnline: In its latest report titled “Short Range Outlook for 2018-19”, the World Steel Association (Worldsteel) forecasts that Iranian steel demand will increase by 5.5% to 21.05 million tons by the end of 2018 and rise up to 5% in 2019 to 22.1 million tons.

News ID: ۷۴۵۲۱۰

22 April 2018

Steel intensity for Iran is projected to stand at 35.3 tons per million real 2010 US dollar in 2018, and stay the same next year. WSA also puts Iran’s steel demand per capita at 256.7 kilograms of finished steel per person in 2018, and 266.9 in 2019.

Steel intensity is the amount of steel used per unit of gross domestic product. Intensity reflects the secular demand for steel, as opposed to cyclical demand. The amount of steel used in vehicles and the popularity of alternative materials affect the intensity, or how much steel is needed per unit produced. The state of the economy, however, determines the number of units, according to Financial Tribune.

Iranian steel mills produced 21.72 million tons of crude steel in 2017, up 21.4% compared to the year before that, Worldsteel reported.

Iran’s steel output in December 2017 grew by 30.2% year-on-year to hit 1.98 million tons.

Crude steel is defined as steel in its first solid (or usable) form: ingots, semi-finished products (billets, blooms, slabs). This is not to be confused with liquid steel, which is steel poured.

Steel Demand, Economic Growth in MENA

Steel demand in Middle East, home to most of Iran’s export markets, is expected to grow 4.6% in 2018 to 55.74 million tons and 3.7% the next year to 57.8 million tons.

(Persian) Gulf Cooperation Council members will account for 25.25 and 25.86 million tons of Mideast steel demand this year and the next respectively. (P)GCC demand growth will also be up 3.9% and 2.4% respectively.

Countries in North Africa are also among Iran’s regular steel buyers. Demand in the region is set to record a healthy 5.9% uptick in 2018 to 22.8 million tons and 5.4% the next to 24.03 million tons.

Economic growth in Middle East and North Africa region is projected to rebound in 2018, thanks to the positive global outlook, oil prices stabilizing at relatively higher level, stabilization policies and reforms, and recovery and reconstruction as conflicts recede.

Growth in MENA is expected to rebound to 3.1% in 2018, following a sharp decline to 2% in 2017 from 4.3% in 2016, according to World Bank’s reports.

In the short term, the outlook for MENA remains positive and the growth rebound is expected to hold firm over the next two years, reaching 3.3% in 2019 and 3.2% in 2020.

However, geopolitical tensions, the challenges posed by the forcible displacement of people, including refugees, and the rising level of debt in the region could cloud the positive outlook.

Global Outlook

WSA’s global forecasts indicate that steel demand will rise worldwide by 1.8% to 1.61 billion tons in 2018, an increase of 1.8% over 2017. In 2019, it is forecast that global demand will grow by 0.7% to reach 1.62 billion tons.

However, steel demand in China, as the world’s largest producer and consumer of the material, is expected to remain flat in 2018 at 736.8 million tons and drop 2% in 2019 to 722.09 million tons, mostly due to a slowdown in construction activity.

Demand in the developed world is expected to increase by 1.8% in 2018 and decelerate to 1.1% in 2019.

Yet emerging and developing economies (excluding China) are expected to increase their steel demand by 4.9% and 4.5% in 2018 and 2019 respectively.

Commenting on the industry’s global outlook, Thachat Viswanath Narendran, chairman of the World Steel Economics Committee, said, “In the next couple of years, the global economic situation is expected to remain favorable with high confidence and strengthening recovery of investment levels in advanced economies. Benefiting from this, steel demand in both developed and developing economies is expected to show sustained growth momentum with risks relatively limited. However, a possible adverse impact from rising trade tensions and the probable US and EU interest rate movements could erode this current momentum.”

Worldsteel’s short range outlook in April 2018 is one of a series of reports first started in 1968. It is prepared by the association’s secretariat on the basis of assessments of short-term trends in steel market obtained from publicly available sources and contributed by steel company or organization members of World Steel Association.

The association represents approximately 85% of the world’s steel production, including over 160 steel producers with 9 of the 10 largest steel companies, national and regional steel industry associations, and steel research institutes.