Growth in Sector-wise Steel Consumption to Decelerate Globally in 2020: WSA
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In its short range outlook released by the World Steel Association (WSA), the organisation has presented a very pessimistic global picture for sector-wise consumption of steel that includes construction, automotive and engineering sector.
Global construction sector growth to decline from 2.8% in 2018 to 1.2%in 2020
WSA has predicted that the global construction sector's growth is expected to slow to 1.5% in 2019 and 1.2% in 2020 after growth of 2.8% in 2018.
a) Growth in developed economies
The picture for construction activity in the developed economies in 2019-2020 is mixed. The U.S. construction sector is expected to weaken in 2019 with no recovery in 2020.
In Europe, the construction sectors in Germany, Spain, Netherlands and Central European economies, while still maintaining growth, will slow down due to weakening economic fundamentals and constraints in construction capacity. Civil engineering is expected to drive the construction growth owing to investment in energy, transport and communication networks.
The Japanese construction sector is projected to report almost no growth as the decline in residential construction will be offset by growth in civil engineering. Korea's construction sector is expected to continue contracting despite some support from public projects.
b) Growth in emerging markets
Construction in emerging markets will be strong, largely influenced by infrastructure projects. In China, the real estate sector drove growth in construction activity in 2019, but in 2020 this will slow down. Infrastructure investment is expected to be boosted by government stimulus. In ASEAN and India, active infrastructure investment is expected to drive construction.
Turkey has seen contracting construction activity in line with the overall economy. After a severe decline in 2019, Turkey will see only a moderate rebound in 2020.
In Latin America generally, infrastructure investment is constrained by uncertainty and government budget issues. Brazil's construction sector, which has been contracting since 2014, has shown positive growth in 2019 and this could continue with infrastructure a policy priority.
Key automobile manufacturing countries to face recession
Global automotive production decelerated in 2018 and is expected to contract in 2019 with recession deepening and broadening across several major markets including Germany, Turkey, China and South Korea.
The automotive market has been hit by more by global economic factors including, market saturation, reduction in purchasing and promotion incentives and customer hesitancy during the transition of the auto industry from combustion engine-powered via hybrid to fully electric vehicles.
This decline has been particularly severe in Germany and China with passenger car production declining by -10.6% and -13.8%, respectively in the first eight months of 2019. It is expected that the Chinese government may introduce some tax measures to boost sales of passenger vehicles, especially new energy vehicles. This could lead to a recovery in 2020.
In the U.S., the auto market is expected to decelerate with no growth in 2019 and only a slight increase in 2020. Japanese and Korean car production is being affected by weak export markets.
The Indian automotive industry suffered from the liquidity crisis and weak global demand to show almost no growth in 2019, but it is expected to pick up in 2020 before the introduction of stringent pollution standards in April 2020.
The Turkish auto industry continues to struggle with contraction in both domestic and export markets. In Brazil and Mexico, auto production maintained positive but slowing growth in 2019.
Global engineering sector to face slump amid escalating trade war
After strong growth in 2017-18, global mechanical machinery is expected to decelerate to remain flat in 2019-20 as the deceleration of the global economy and continuation of trade tensions hurt global investment activities. The mechanical machinery output in major exporters - China, Germany and Japan - is expected to keep falling in 2020. The Chinese mechanical machinery sector is expected to decline by -1.0% in 2019, even though the replacement demand for equipment will provide some support in 2019 and 2020.
General-purpose machinery, including energy related machinery, will positively contribute to the sector's growth. On the other hand, construction machinery is expected to decline in 2019 and 2020, but the decline will be partially offset by the demand deriving from expansion of infrastructure projects in developing countries.
