Trade friction will not change volumes says worldsteel

Ongoing  disputes over trade, notably with the USA at the centre, have been a  focus of attention over the last year. These may not significantly  change the overall volume or direction of trade however, according to  worldsteel executives at its annual gathering in Tokyo Tuesday. Key  areas of demand growth are meanwhile important in ensuring other markets  are not flooded by exports from some countries, Kallanish notes.

“We  believe in markets that are as free as they can be within a rules-based  system like the WTO,” says worldsteel president Edwin Basson. He would  not be drawn on the future direction of trade policies, but notes that  sometimes we imagine the world is darker than it is.

The  total proportion of steel traded across borders has historically been  around one third of total production, and this remains the case, with  trade at around 32%, Basson says. Historically, trade frictions such as  those in the early 1990s do not have a significant impact on volumes  even when there is an impact on prices, despite all the questions  they engender, he adds.

For  Japan in particular meanwhile, the impact of trade frictions is  expected to be small, according to Kosei Shindo, president of Nippon  Steel and Sumitomo Metal Corporation (Nippon Steel). Only around 2% of  Japan’s output is exported to the US, and it account for only around 5%  of US imports. The impact of trade frictions globally has also been  minimised thanks to the pace of global economic growth, he notes.

For  the western world, in addition to the state of the major exporting  nations, the strength of economies in Southeast Asia and the Middle East  is crucial, Basson says. Luckily, Southeast Asia is seeing strong  demand growth in the near term. The region is set amidst major exporters  China, Japan and Korea and soaks up significant volumes from these  countries. The Middle East also remains a major steel importer despite  the growth in capacity there.