Global Steel Demand Outlook
The latest report from Worldsteel offers valuable insights into the current state of the steel industry and provides projections for the years 2023 and 2024. According to Worldsteel, steel demand is on the path to recovery after contracting by 3.3% in 2022. The forecast for 2023 anticipates a 1.8% growth, with steel demand reaching 1,814.5 million tonnes. Furthermore, in 2024, we can expect a 1.9% increase in steel demand, pushing it to 1,849.1 million tonnes.
Key Highlights and Insights
Mr. Máximo Vedoya, Chairman of the Worldsteel Economics Committee, emphasised that high inflation and interest rates have impacted steel demand since the second half of 2022. This effect has been particularly noticeable in the EU and the US, affecting both investment and consumption in various sectors and regions.
China, a significant player in the global steel industry, is expected to stabilize its property market in the latter part of 2023. The Chinese government has already taken measures to support the economy, and these actions are likely to result in slight positive growth in China’s steel demand. However, the 2024 outlook for China remains uncertain due to the ongoing economic transition.
Uncertainty looms over the global steel industry due to regional conflicts and unrest in areas like Russia, Ukraine, Israel, and Palestine. These geopolitical tensions can contribute to rising oil prices and further geo-economic fragmentation, posing downside risks to the industry.
Infrastructure investment is a bright spot in many regions, even in advanced economies. This momentum reflects ongoing efforts in decarbonization and is helping counterbalance the weakening construction sector due to high-interest rates.
Regional Steel Demand Outlook
Developed Economies: Steel demand in developed economies is expected to contract by 1.8% in 2023, primarily due to monetary tightening and high energy costs. However, in 2024, a technical rebound is anticipated, resulting in a 2.8% growth in steel demand.
European Union (27) and United Kingdom: Despite challenges posed by high-interest rates and energy costs, the EU is showing resilience, with its auto sector recovering. Residential construction and manufacturing face difficulties, but infrastructure investment remains stable.
United States: The US economy remains robust, despite the impact on residential construction. Commercial building and infrastructure sectors are showing resilience, supported by recent legislative acts. Steel demand is expected to grow by 1.6% in 2024.
Japan: Labor shortages and rising costs have affected construction, while manufacturing is expected to show moderate growth in steel demand, driven by automotive production.
South Korea: Recovery from 2022 flood damages and a modest increase in construction will support steel demand in 2023, particularly in the automotive sector.
Emerging and Developing Economies: These regions exhibit varying degrees of resilience, with developing Asia excluding China showing strength. Infrastructure investment remains a driving force in many emerging economies.
India: India’s steel demand is expected to continue its high growth momentum, supported by government spending on infrastructure and automotive production.
ASEAN: Domestic demand and infrastructure investment drive steel demand, although external conditions are deteriorating in some countries.
Other Europe: Turkey is expected to record significant steel demand growth in 2023, while Other Europe is projected to experience a notable increase in 2023 and 2024.
Middle East and North Africa: The GCC and North Africa are facing steel demand contractions, but the situation is expected to improve in 2024, especially in the UAE.
Russia and Other CIS + Ukraine: Russia and Ukraine are expected to see moderate recoveries in 2023, with the situation improving in Ukraine. However, geopolitical factors can impact these forecasts.
Latin America: Latin America is grappling with a challenging economic and political landscape. While some countries have begun to loosen monetary policy, the steel demand outlook remains uncertain.
Brazil: Brazil’s steel demand is expected to recover moderately in 2024, supported by government investment in construction.
Mexico: Mexico’s economy is buoyed by consumer sentiments and nearshoring activities, with positive growth in steel-intensive manufacturing sectors.
In conclusion, the global steel industry is navigating through a complex landscape marked by high inflation, fluctuating interest rates, and regional conflicts. It is crucial for companies to remain vigilant and adaptable to these changing circumstances. While challenges exist, opportunities for growth persist, particularly in infrastructure investment and emerging markets.
Source: worldsteel Association