In its January 2017 updated World Economic Outlook, the International Monetary Fund (IMF) has slightly revised upward its global economic growth projections for 2017 and 2018, on the back of improvements in some emerging market and developing economies as well as better prospects in the advanced economies like United States, Europe, and Japan. Overall global growth is expected to rise to a rate of 3.4% this year and 3.6% next year, from 3.1% in 2016.
According to IMF, advanced economies are set to grow at 1.9% this year and 2% next year while the emerging and developing economies are forecast to grow by 4.5% in 2017 and 4.8% in 2018.
Among the emerging economies, China will continue to be a major driver of world economic developments. Nevertheless, the country’s economy, which grew 6.7% in 2016, will continue its transition to a moderate growth path, with IMF projecting its economic growth to slow to 6.5% in 2017 and 6.0% in 2018. India, which saw its economic growth rate dipping from 7.6% in 2015 to 6.6% in 2016 due to the government’s demonetisation drive, is expected to see a pick up in its rate of growth to 7.2% in 2017, which will further surge to 7.7% in 2018.
For ASEAN-5 (Indonesia, Malaysia, Philippines, Thailand and Vietnam), IMF expects the grouping’s economy to maintain at a steady growth pace of 4.9% this year and 5.2% next year, following a 4.8% growth in 2016.
In the same month of January of 2017, the World Steel Association released its annual report on world crude steel output which shows world crude steel production rising marginally by 0.8% in 2016 to 1,628.5 million tonnes, compared to 1,615.4 million tonnes in 2015.
Among the countries in Asia, India registered the highest rate in output growth, with total crude steel production of 95.6 million tonnes, up 7.4% year-on-year. China’s crude steel output increased by 1.2% year-on-year and reached 808.4 million tonnes in 2016. The other two major steel producing countries in Asia, i.e. Japan and South Korea, both registered marginal drops in output in 2016. Japan’s crude steel production dropped 0.3% year-on-year to 104.8 million tonnes while South Korea’s production was 68.6 million tonnes, a decrease of 1.6% compared to 2015.
China continued to dominate world crude steel output with its global share increasing from 49.4% in 2015 to 49.6% in 2016. While Japan maintained its position as the second largest steel producing country in the world, India is fast catching up and is poised to overtake Japan soon. For ASEAN, Vietnam was the biggest steel producer, with total crude steel production in 2016 estimated at 6.8 million tonnes, up 20.4% year-on-year.
Form the above, it would appear that the world economy as well as the global steel industry are now on more stable footing. Nonetheless, the steel industry is still operating in a climate of uncertainty and the road ahead is still full of challenges.
The global steel industry managed to stage a turnaround in 2016, largely on account of a strong recovery in steel prices, led by China. Steel prices in China have been holding firm thus far in 2017. Due to the higher prices, Chinese steel exporters are now facing intense competition from other countries such as CIS and Turkey.
How will the steel scenario play out for the rest of the year? Will steel prices remain volatile or will there be some price stability at long last? What about raw material prices? How will China’s planned steel capacity cuts impact the steel markets? What is happening in the Indian steel industry and how will it impact the steel industry in South East Asia? How is the steel industry in ASEAN evolving and will it be able to meet the many challenges ahead? These and many other pressing issues will be addressed by industry experts in the Keynote Session, the session on Regional Developments and the session on Market Perspectives and Challenges on the opening day of the 2017 SEAISI Conference and Exhibition which will be held at Resorts World Sentosa in Singapore from 22 to 25 May 2017.
Many other interesting sessions and programmes have also been lined up for the duration of the conference. I will provide more details in the next issue of the Newsletter. In the meantime, make sure you send in your registration form early to enjoy the early bird rate.
TAN AH YONG