Global steel demand set to fall again in 2016: Worldsteel

LONDON (Reuters) - Global steel demand will continue to fall this year before a slight pick-up in 2017, the World Steel Association forecast on Wednesday.

Workers direct a crane lifting newly-made steel bars at a factory of Dongbei Special Steel Group Co., Ltd., in Dalian, Liaoning province, China, October 13, 2015. REUTERS/China Daily

Falling demand has plunged the global steel market into crisis, with excess capacity taking a heavy toll on producers, including those in China - leading to plant closures and job losses.

Global apparent steel use - deliveries minus net exports of steel industry goods - is expected to fall 0.8 percent in 2016 to 1.488 billion tonnes after a 3 percent fall last year, according to Worldsteel.

China’s steel demand is seen falling 4 percent this year to 645.4 million tonnes and a further 3 percent in 2017, after a slide of 5.4 percent in 2015, the group added.

China, which produces about half the world’s steel, is under increasing international pressure to tackle a local supply glut that has flooded foreign markets with cheap material.

“The key to this year’s figure is the decline in demand from China, where a surplus in residential properties is a problem, but also weaker demand from Brazil and Russia,” Worldsteel Director General Edwin Basson told a briefing in London.

Steel demand in both economies is expected to contract by 8.8 percent this year.

Europe has taken a huge hit from the market slide. Tata Steel has put its UK business up for sale after substantial losses over the past two years.

“The global steel market is suffering from insufficient investment expenditure and continued weakness in the manufacturing sector,” Worldsteel said.

“In 2016, while we are forecasting another year of contraction in steel demand in China, slow but steady growth in other regions including NAFTA (North American Free Trade Agreement countries) and EU is expected.”

Next year, however, global demand for steel is due to edge up by 0.4 percent to 1.494 billion tonnes, Worldsteel added.

Reporting by Clara Denina and Eric Onstad; Editing by Mark Potter and Greg Mahlich