Steel Demand Forecast
Steel demand in 2021 rose to 1.83 billion metric ton (mt) or 2.7%, recovering from a worldwide pandemic stronger than anticipated in several regions. There had been a deceleration in China, however, that was sharper than expected, according to World Steel Economics Committee Chairman, Maxino Vedoya.
Vedoya continued, “for 2022 and 2023, the outlook is highly uncertain. The expectation of a continued and stable recovery from the pandemic has been shaken by the war in Ukraine and rising inflation”.
However, according to the World Steel Association, Short Range Outlook released on April 14, 2022, some growth can be expected. Their outlook predicts forecasts show demand will edge up to 0.4% to 1.84 billion mt in 2022 and will see even further growth to 1.88 billion mt or a 2.2% increase in 2023.
Why it’s happening now?
In a press briefing on April 14, Basson said, “We expect growth to start coming in 2023 and this is on the presumption that the war in Ukraine will come to a conclusion sometime in this year and at least the end of this year we will begin to see a recovery in the steel use in those markets, but throughout our forecasts, we have assumed that steel use in Russia and Ukraine is going to be way down from previous years and that the impact will flow over.”
Basson continued to elaborate stating that the war was very likely to impact Europe the most due to its reliance on Russian energy and geographic proximity to Ukraine and Russia, but that other regions would likely see less of an impact, depending on their direct trade and financial exposure to Russia and Ukraine.
War in Ukraine
The World Steel Association expected the EU and UK steel demand to fall to 161.5 mt or down 1.3% in 2022 due to the region’s high dependence on Russian energy and the inflow of refugees, although they expected the demand to grow 4% in 2023.
The developed world was expected to lower by 1.1% in 2022 and 2.4% in 2023 after rising 16.5% in 2021.
The geopolitical situation surrounding Ukraine poses significant long-term implications for the global steel industry. Among them are a possible readjustment in global trade flows, a shift in energy trade and its impact on energy transitions, and continued reconfiguration of global supply chains.
Emerging economies outside of China would be impacted facing worse challenges due to the external environment, the war in Ukraine, and US monetary tightening which would lead to low growth of 0.5% in 2022 to 484.4 million mt and 4.5% in 2023, down from a growth of 10.7% in 2021.
“We do not see a strong recovery in China, so the stabilization that we started seeing in the latter half of 2021 in China, we think will continue through for most of 2022,” Basson said.
Many countries required infrastructure as part of their pandemic recovery programs, with the energy transition expected to drive the sector’s growth for many years, which would allow a record growth of 3.4% due to global construction industry recovery in 2021.
However, inflation remains a problem in many countries and markets, particularly in construction, which has a dampening effect on steel use.
According to World Steel, the global automotive industry remains sluggish in 2021 due to supply chain bottlenecks, the war in Ukraine likely delaying any return to normal supply, especially in Europe.
It is expected that steel use will still play a part in automated vehicles. Global electric vehicle sales nearly doubled in 2021 from 2019.
“The continued stickiness in the supply chains, particularly in the auto industry, has still had an impact in the early parts of 2022, but as we go through the rest of the year, we expect that to dissipate and demand to normalize in those markets,” Basson said, adding “the automotive sector consumed about 12%-13% of all steel used or around 200 million mt”.
Continuing, Basson said, “Steel, if anything is going to play a stronger role in the future than in the past, so we’re quite positive about the role of steel in the automotive market and also not worried about the EV market in the steel industry.”
Steel scrap as an important resource in the steelmaking process is attracting greater attention for its energy efficiency, low carbon emissions, and cyclic regeneration. Improved steel-scrap usage will decrease the demand for natural resources and lessen the overall environmental impact. The scrap ratio will continue to increase from 2020 to 2030 in China and is expected to reach 0.366 by 2030.
Below is a chart indicating the steel demand forecasts by industry Research
Forecast of steel demand of each sector in China between 2010 and 2050
In summary, the steel market demand remains volatile due to geopolitical situations and pandemic residual effects. Stabilization following the pandemic was shaken due to the outbreak of the war in Ukraine. The demand growth remains minimal, but at least remains positive. The establishment of new steel service centers in various countries to cater to the manufacturing sector is projected to help drive growth. Should the war in Ukraine end soon, the demand growth outlook could look more promising. We will update information as the world issues resolve and more data becomes available.
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