Recycling Today is delivering news regarding long-term steel prices, which is important for tire recyclers relying on steel sales.

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The World Steel Association in Brussels released a Short Range Outlook (SRO) for 2016 and 2017, where it forecasts 0.2% increase in global steel demand in 2016, which follows a contraction of 3% in 2015. Consumption for 2016 is predicted to reach 1501 mio tons. The organization forecasts that in 2017 global steel demand will grow by 0.5% and will reach 1510 mio tons.

Worldsteel Economics Committee claims that the steel industry environment remains challenging, but there are escalated uncertainties driven by geopolitical issues all over the world. E.g. Brexit raised uncertainty on the long-awaited recovery of investment in the EU. Weak investments all over the world hampers a stronger steel demand recovery. Forecast for China, though, is better than expected and combined with growth in emerging economies it will help the global steel industry to move back to a steady growth path starting from 2016 onwards. The slight growth momentum will still remain weak due to rebalancing in China and weak recovery in the developed economies.

There are certain risks to such an outlook which arise from high rates of corporate debt and real estate market issues in China and growth of instability in various regions of the world. Albeit, steel demand in the emerging and developing economies apart from China is going to accelerate to show 4% growth in 2017 and this is due to resilient emerging Asian countries and stabilization of commodity prices.

GDP growth in China in 2016 will be at its lowest since 1990, claims Worldsteel, but the contribution of services and consumption will be higher. As a measure of softening the impact of rebalancing, there are several stimuli stipulated by government, namely boosting infrastructure spending, real estate and automotive markets, all of which will affect steel prices, making declines in steel demand less severe than predicted by the previous forecast in April. However, inasmuch as the rebound effect is rather limited and non-sustainable, construction sector will continue to drag steel demand down. Steel demand in China is projected to decline by 1% thisyear and by 2% in 2017.

there are some emerging and low-performing economies which show signs of stabilization this year. For instance, Brazil’s steel demand is expected to start a moderate recovery in 2017. But in other countries, such as MENA region, Russia, Mexico and South America low and unstable oil prices continue to undermine steel prices.

Steel demand in emerging and developing economies, apart from China, is expected to grow  by 2% in 2016 and by 4% in 2017. Meanwhile, steel demand in developed economies is projected to increase by 0.2% in 2016 and by 1.1% in 2017, claims Worldsteel.

Article source: Recycling Today