IREPAS ISTANBUL: Global rebar demand to reach record high in 2018-19

Global rebar demand will reach record levels in 2018-19, supported by growth in the construction sector, particularly in developed economies and across Asia, according to Celsa Group.

Speaking at the 79th meeting of the International Rebar Exporters & Producers Association (Irepas), held in Istanbul on September 16-18, Celsa Group’s international commercial director, Jose Angel Rey, forecast that worldwide rebar consumption will reach 391 million tonnes in 2018, compared with 376 million tonnes in 2017 and little more than 200 million tonnes in 2008.

“Rebar consumption is now the highest ever seen and very soon it will exceed 400 million tonnes,” he said.

Rey said the global construction sector was expected to grow by 3.6% annually between 2018 and 2022, according to the estimates from the Construction Intelligence Center, with its annual value expected to rise by more than 20% to $12.7 trillion by 2022, compared with $10.6 trillion in 2017.

The accelerating growth rate of the global construction market in 2018-19 is being driven primarily by the pick-up in advanced economies, such as Europe and North America, with combined growth in these regions rising to 2.7%, up from 2% in 2017, Rey added referring to data provided by BMI Research.

Construction activity in the European Union will grow 2.7% this year – albeit down from last year’s 3.9% growth rate – and while it will continue to grow in 2019 and 2020, it will do so at a slower rate, Rey said referring to the report of the 85th Euroconstruct Conference, held in Helsinki, Finland, in June.

Construction growth will be fastest in Spain, Hungary, Poland, Ireland and Portugal. Conversely, the level of construction activity will remain steady over the next few years in Finland, Germany and Sweden.

The pace of China’s construction output growth will fall below 5% in the next three years, while India will take up the baton with growth rates around 20% and smaller Asian economies are expected to show annual growth rates higher than 10%, Rey said referring to forecasts from Oxford Economics.

In the first half of 2018, global consumption of rebar increased by 3.9% year on year to 187 million tonnes.

Of that total, China consumed more than half of the total, at 99 million tonnes, which is why “what is happening in China is very important for the global steel industry”, Rey said. “The country’s internal demand is the key factor for the profitability of rebar production.”

The forecast construction sector slowdown in China in 2017 did not happen, with investment in real estate recovering and the accumulated growth rate reaching 10% by July 2018.

Although finished steel exports from China have increased since April 2018 – to about 6-7 million tonnes per month, compared with 5-6 million tonnes in January-March 2018 – the volumes are still significantly lower than in 2015-16 when monthly exports often exceeded 11 million tonnes.

Metal Bulletin’s daily price assessment for domestic rebar in east China was 4,550-4,590 yuan ($664-670) per tonne ex-warehouse on September 20, down from 3,950-4,000 yuan per tonne ex-warehouse on the same date in 2017.

According to Rey, China’s rebar output in the first half of 2018 was 101 million tonnes.

Production figures also exceeded consumption in Turkey, which produced 8 million tonnes of rebar and consumed around 5 million tonnes of it.

And in the CIS region, rebar production exceeded consumption by 1 million tonnes, totaling 6 million tonnes.

Yet this surplus was largely outweighed by lower production and higher consumption figures in other regions.

The Asian region (excluding China) produced 22 million tonnes of rebar, while consumption was 23 million tonnes in January-June 2018, Rey said.

In North America, consumption of rebar was 7 million tonnes in the period, exceeding supply by 1 million tonnes.

And for the rest of the world combined, consumption outpaced production by 3 million tonnes, standing at 36 million tonnes.

“Having a reasonably balanced regional supply and demand should remain a priority for rebar producers,” Rey said.