According to the International Monetary Fund (IMF), global economic momentum is set to accelerate slightly in 2017, driven mainly by the emerging markets. While a notable recovery is anticipated for the US, most of the other industrial nations are more likely to report stable growth rates. Somewhat more moderate growth is predicted for the Chinese economy, along with an end to the recessions in Russia and Brazil, while stronger growth is forecast for the other emerging markets. All in all, the IMF anticipates global economic growth of 3.4 % in 2017 (2016: 3.1 %).
The euro zone is expected to continue its gradual recovery, with domestic economy considered a decisive factor, although private consumption may slow a little as a result of the recent renewed rise in energy prices. Capital expenditure is likely to make a below-average contribution to macroeconomic development due to the structural problems still prevailing in many euro countries. With an estimated 1.6 %, the IMF anticipates a largely stable growth rate in the euro area compared with 2016 (1.7 %).
The moderate upswing in Germany’s domestic economy is forecast to continue in 2017. This development will still be attributable to private consumption, as opposed to the export trade from which little impetus is anticipated, also in view of the uncertainty surrounding the future economic policy of Germany’s important trading partners. The IMF predicts a slight overall slowdown in economic growth for Germany to 1.5 % in 2017 (2016: 1.7 %).
The outlook for the steel, pipes and tubes markets that are relevant for the Strip Steel, Plate / Sections, Mannesmann and Trading business units is as follows:
Market outlook for steel
The World Steel Association anticipates that the marginal recovery in the demand for steel will hold steady in 2017. This assessment is supported by expectations of recessionary developments in important regional markets (Brazil, Russia) tailing off and a renewed upturn in demand for steel in the United States, following the slump in market supply in 2015/2016 due to the downturn in oil and gas prices. Global demand for steel is therefore likely to grow by 1 % in the current year, which is too slow an acceleration for creating the stimulus crucial to finding a solution to the global structural crisis in steel, all the more so as the supply side also contributes too little to mitigating the structural problems. In China, the first steps toward sustainable capacity reduction were introduced over the past year that will, however, be far from sufficient. In addition, capacities in the rest of the world continue to be ramped up, with the exception of the EU and Japan where capacities were shut down.
Based on the forecast for the steel processing industries in Germany and in the EU that indicates stable demand, market supply in Germany is expected to rise (+2 %). In the assessment of the German Steel Federation, positive demand impetus from the inventory cycle will also contribute to this development. Assuming that German steel imports and exports remain around the level posted in 2016, crude steel output is likely to grow by 2 %. The anticipated paring down of stock levels that are too high, especially in Italy, and the consequences expected from the Brexit referendum will generally burden demand in the EU. Accordingly, EUROFER 2017 predicts that there will be no growth in demand in the EU countries as a whole. Given the persistently difficult foreign trade conditions, the question of whether the currently assumed easing of the EU balance of trade for steel actually materializes over the course of the year, with the anticipated growth in EU crude steel output (+1.5 %), remains open.
Market outlook for steel tubes
Compared with the very cautious assessment in the previous year, the outlook for the steel tube industry has improved slightly. Following the initial upside impetus emanating from rising raw material and steel prices, the steel tubes business is also likely to receive support. Similarly, this is also likely to benefit from North America’s expansive economic policy and energy policy that is focused more strongly again on fossil fuels. The seamless tubes business in particular could recover further, even if there are still significant surplus capacities specifically in this market segment. The large-diameter pipes market will remain dominated by the project business and will continue to be fiercely contested. The latter applies especially to the line pipe business with pipes of up to 16". The precision tubes industry is likely to develop at a stable level against the backdrop of a robust economy.
The machine engineering market that is relevant for the Technology Business Unit expected to develop as follows:
Market outlook for machine engineering
For the full year 2017, the German Engineering Federation (VDMA) anticipates a slight increase in sales of 1 %. By contrast, growth in the food and packaging machinery market has been estimated at between 3 % and 4 % in 2017. The industry has proved to be more resilient compared with other segments of mechanical engineering. Strong impetus is anticipated from the region of North America. However, the extent to which the political situation in the US impacts future capital expenditure will require close observation. Strong propensity to invest has been assumed in Asia and particularly in China in 2017. The same applies to Africa and the Middle East where there have been signs of an uptrend since the end of the reporting year that is likely to continue over the course of 2017.
A positive development (+2 %) in 2017 has also been assumed for the companies of the Technology Business Unit that operate in the plastics processing industry.