Steel demand to grow – but not in China

Global steel demand is expected to grow in the next two years, according to the latest short-range outlook from the World Steel Association (worldsteel).

It forecasts that demand this year will see a 1.7% rebound to reach 1 793 million tonnes (Mt). Further growth of 1.2%, to reach 1 815 Mt, is expected for 2025.

Martin Theuringer, chairman of worldsteel’s economics committee, says: ‘After two years of negative growth and severe market volatility since the Covid crisis in 2020, we see early signs of global steel demand settling in a growth trajectory in 2024 and 2025.’

He adds: ‘The global economy continues to show resilience despite facing several strong headwinds, the lingering impact from the pandemic and Russia’s invasion of Ukraine, high inflation, high costs and falling household purchasing power, rising geopolitical uncertainties, and forceful monetary tightening.’

Chinese decline

Worldsteel expects steel demand in China this year to remain around the level of 2023, with lower demand in the real estate sector offset by demand from infrastructure investment and manufacturing sectors. Even so, demand in 2025 is anticipated to decline by 1%.

‘This projection is also in line with our view that China might have reached its peak steel demand. The country’s steel demand is likely to continue to decline in the medium-term as China gradually moves away from a real estate and infrastructure investment dependent economic development model.’

Projections for the rest of the world suggest a broad growth in steel demand at a relatively strong level of 3.5% per annum over 2024-25. India has emerged as the strongest driver of recent demand growth and worldsteel projections suggest it will charge ahead with 8% growth in 2024 and 2025, driven by continued growth in steel using sectors and infrastructure.

The EU and the UK face the biggest challenges, however. They are said to be challenged on a multitude of fronts – geopolitical shifts and uncertainty, high inflation, monetary tightening and partial withdrawal of fiscal support, and high energy and commodity prices.

In stark contrast, US steel demand is said to continue showing healthy fundamentals.

Climate change

The impact of climate change is acknowledged with worldsteel’s report noting that public investment to reinforce infrastructure and reconstruction of areas hit by natural disasters were major factors supporting steel demand inJapan, China, Korea and Turkey.Risk is said to have moderated since the previous update in October 2023.

On the upside, faster than expected disinflation accompanied by further monetary policy easing could provide a significant boost to steel using sectors. On the downside, further escalation in geopolitical tensions is possible and inflationary pressures are proving more persistent than expected.