The global steel market will tighten in coming years and eventually go into a deficit in 2020, says research firm BMI.
Despite the slowing in both global production and consumption growth, larger increases in absolute consumption, compared with production, will lead to a tightening of the market.
The global steel market will see the surplus shrink to 7.6-million tons in 2017 from a surplus of 10.5-million tons in 2016, owing to a larger increase in absolute consumption compared with production.
The market will reach a deficit of 4.2-million tons in 2021 as production growth fails to keep up with consumption growth.
Global steel production growth will remain muted as steel producers face difficulty in maintaining profitability in the continued subdued price environment.
While output in the Chinese steel sector will be supported by resilient steel prices this year, production thereafter will decline owing to a relapse in steel prices and government's desire to curb overcapacity in the domestic industry and consolidate the sector.
China will remain the driving force behind global steel production. BMI estimates the country will account for 50.5% of global steel production this year, but that its share of global steel production will decrease to 47.8% by 2021.