The world’s largest steel producer says the economic slowdown in China is affecting global demand

ArcelorMittal, as well as smaller European producers such as Salzgitter AG and Voestalpine AG, are alarmed by the economic slowdown in China. The country that uses about half of the steel produced in the world is expected to register a drop in demand, the first contraction since 2015. Demand in the U.S. and Europe will grow at a slower pace this year, ArcelorMittal representatives declare.

Reports from steelmakers reinforce economic data that point to a bleak outlook for the global economy. The sentiment is maintained by the current China/US trade war and Brexit, which indicates a decrease in demand.

Vinegar is often seen as a barometer for global growth, as it is considered the backbone of modern society. The industry is also facing a squeeze on profit margins. Being the consequence of the increase in the price of iron ore extraction following the collapse of the mining dam. Which belongs to the giant Vale SA, in Brazil.

This quality has led to the volatility of world markets. Also, at high iron ore prices that will keep steel prices high.

ArcelorMittal considers that, compared to last year, the increase in global demand is decreasing. However, ArcelorMittal reported record earnings. It doubled its dividend and reduced its debts in the fourth quarter, a sign that the company is in a stronger position.

Economic slowdown in China due to low demand for steel

China’s steel demand will decrease by 0.5% to 1.5% this year. Compared to an increase of 3.5% in 2018. While world consumption will grow at a slower pace than last year, the global outlook, with the exception of China, is positive, determined by the stabilization in Turkey. An ArcelorMittal representative reported.

China may increase exports due to weaker domestic demand, but neighboring Asian economies should be able to absorb volumes, said Aditya Mittal,

Article source: https://www.bloomberg.com/news/articles/2019-02-07/arcelormittal-sees-steel-demand-growth-slowing-as-china-drops