Frank Zhong, the deputy managing director of Worldsteel, said China's steel demand may have passed its historic peak after being hit hard by zero Covid policies in recent years. China's expected 8 percent gross domestic product growth this year will be driven mainly by private consumption, while fixed asset investment is likely to remain flat and there are no expectations of more radical stimulus measures this year. Zhong added that the significant decrease in real estate investment since early 2022 has put pressure on China's total construction investment, offsetting the increase in infrastructure investment.
Ahmed Ezz, the chairman of Egyptian steelmaker Ezz Industries, said rebar consumption growth in North Africa and the Gulf Council countries will remain flat in 2023. Higher consumption in Iraq, Libya and Yemen is expected to offset the decline in Algerian rebar consumption, as Algerian investments have recently focused on export-oriented steelmaking capacity. However, Ezz said the region's rebar demand has the potential to continue growing fast in 2024 or 2025. Egypt, in particular, could consume an estimated additional 3-4 million tons/year in the long term if government restrictions on private construction to protect farmland are lifted.
Europe's construction sector is expected to remain stunted by high energy prices and interest rates until at least the end of the year. While infrastructure projects in northwestern European countries continue to generate demand, private housing sectors are suffering. Only half of the 400,000 apartments planned to be built in Germany this year are expected to be built, a market participant said. "Southern European rebar producers are running at around 60 percent capacity but are still fighting for orders," he added.
The outlook for US rebar demand is uncertain for 2023 as construction projects have slowed due to a shortage of financing. The failure of several mid-sized US banks over the past few months has had a disproportionate impact on the construction sector, as most projects are financed by mid-sized banks rather than large banks, a trader said. With new capacity due to come online, any additional US demand could be met by domestic production over the next few years.
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