Message from Secretary General_February 2019

Posted on 27 February 2019
 

Source: SEAISI
In its latest January 2019 update to its World Economic Outlook, the International Monetary Fund (IMF) cut its global economic growth forecast for 2019, citing escalating trade tensions as a key source of risk to the outlook. Global economy is now projected to grow at 3.5% in 2019, down 0.2 percentage point from its October 2018 forecast. The projected growth rate is also 0.2 percentage point lower than the estimated growth rate of 3.7% in 2018.
 
Growth in advanced economies is expected to slow from an estimated 2.3% in 2018 to 2.0% in 2019 while the emerging and developing economies’ growth is forecast to dip marginally to 4.5% in 2019 from 4.6% in 2018.
 
Among the emerging economies, China’s economy will continue to slow down due to its financial regulatory tightening and trade tensions with the United States. The country reported a growth of 6.6% in 2018, the weakest since 1990. Going forward, IMF predicted that China’s economic growth will decelerate further in 2019 to 6.2%. As for India, IMF is optimistic that the country’s economy will benefit from lower oil prices and a slower pace of monetary tightening following the easing of inflationary pressures. Thus, India’s economy is expected to expand from 7.3% in 2018 to 7.5% in 2019.

For ASEAN-5 (Indonesia, Malaysia, Philippines, Thailand and Vietnam), IMF expects the grouping’s economy to maintain a steady growth pace of 5.1% this year, albeit dipping marginally from 5.2% in 2018. 

In the same month of January of 2019, the World Steel Association (worldsteel) released its annual report on world crude steel output which shows world crude steel production rising by 4.6% in 2018 to 1,808.6 million tonnes, compared to 1,729.8 million tonnes in 2017. All regions in the world recorded increases in crude steel production in 2018, except EU, which saw a 0.3% contraction.

Asia accounted for some 70% of total global crude steel production in 2018, with total output of 1,271.1 million tonnes. All the major steel producing countries in Asia, except Japan, recorded increases in production. China’s crude steel output increased by 6.6% year-on-year and reached 928.3 million tonnes in 2018. India also saw its crude steel production climbing 4.9% year-on-year to 106.5 million tonnes in 2018. South Korea’s production in 2018 was 72.5 million tonnes, an increase of 2.0% compared to 2017. Japan’s crude steel production, on the other hand, was down by 0.3% year-on-year to 104.3 million tonnes in 2018.

China continued to dominate world crude steel output with its global share increasing from 50.3% in 2017 to 51.3% in 2018 while India has replaced Japan as the world’s second largest steel producing country. For ASEAN, Vietnam continued to move up in world ranking, edging up one spot to become the world’s 17th biggest steel producer. Vietnam produced 14.1 million tonnes of crude steel in 2018, up 23.2% year-on-year. The other ASEAN countries in the list of the 40 largest steel producing countries in 2018 are Indonesia (27th, 5.5 million tonnes), Thailand (35th, 4.3 million tonnes), and Malaysia (38th, 3.5 million tonnes).

As for steel consumption, worldsteel had earlier on projected global finished steel demand to grow by 3.9% year-on-year to 1,657.9 million tonnes in 2018. However, it expected global steel demand growth to  slow down to 1.4% year-on-year in 2019 to 1,681.2 million tonnes.

Form the above, it would appear that 2019 will be a challenging year for the world economy as well as the global steel industry and that China will continue to assume a prominent role in dictating the outcome.

While China’s economy is slowing, it still managed to record a comfortable growth rate of 6.6% in 2018. In the same year, China’s apparent steel consumption was up 6.58% year-on-year to 825.5 million tonnes. Due to its strong domestic demand, China’s steel exports dropped 8.1% year-on-year to 69.34 million tonnes in 2018.

Moving on to 2019, the situation might be quite different. China’s economic growth rate is expected to decelerate to 6.2% in the year. The country’s two biggest steel consuming sectors i.e. construction and automotive, are already showing signs of slowing down. On the other hand, China’s steel export has started to pick up, with volume surging 33.3% year-on-year in January 2019 to 6.19 million tonnes.

How will the Chinese economy and steel scenario play out in the rest of the year? What will be the impact on the steel industry in South East Asia and the rest of the world? 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 2019 SEAISI Conference and Exhibition which will be held at The Athenee Hotel in Bangkok, Thailand from 17 to 20 June 2019.

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 book your seat and enjoy the early bird rate.

      TAN AH YONG



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