The World Steel Association (worldsteel) believes that demand for steel this year will grow by 4.5%, a significant rise on the 0.1% recorded during the key pandemic year of 2020. Its latest Short Range Outlook assumes that future waves of the Covid virus will be less damaging and disruptive with an expected growth in 2022 of 2.2%.
According to world steel, anticipated demand for steel of 1 855.4 million tonnes in 2021, rising to 1 896.4 million tonnes next year, is a stronger recovery than expected. Saeed Ghumran al Remeithi, who chairs the worldsteel Economics Committee, said there had been upward revisions in the forecast across the board except for China. ‘Due to this vigorous recovery, global steel demand outside China is expected to return earlier than expected to its pre-pandemic level this year.’
The report notes that although the manufacturing sector’s recovery remained more resilient to new waves of infection, supply-side constraints led to a levelling off of the recovery in the second half of the year and are preventing a stronger recovery. But it warns: ‘Persistent rising inflation, continued slow vaccination progress in developing countries and further growth deceleration in China all pose risks to this forecast.’
The outlook for China notes ‘marked signs of deceleration’ in the steel-using sector since July, leading to a steel demand contraction of -13.3% in July and -18.3% in August. It says this is partly attributable to recent adverse weather and Covid infection waves but more substantive causes include a slowing momentum in the real estate sector and a government cap on steel production.
‘From a high base last year and with a continued negative trend in the real estate sector, Chinese steel demand will have negative growth for the rest of 2021,’ the outlook says. ‘As a result, while the January to August apparent steel use still stands at a positive 2.7%, overall steel demand is expected to decline by -1.0% in 2021.’
Other economies are assessed, including:
In the US, steel demand was aided by the strong performance of the automotive and durable goods sectors but shortage of some components is undermining this recovery. There could be more upside potential if President Biden’s infrastructure stimulus programme is enacted, but this would not feed through until late 2022.
In the EU, the recovery in steel demand that started in the second half of 2020 is gathering pace, with all steel-using sectors exhibiting a positive recovery despite continuing waves of infection.
Russia’s steel demand’s recovery is supported by a strong rebound in the automotive sector. The construction sector is supported by the government mortgage subsidy programme.
A strong positive trend in the Turkish economy that started in Q3 2020 continued in 2021, driven by domestic demand with expanding consumer loans. Turkish steel demand will continue to show high double-digit growth in 2021, driven by infrastructure projects and industrial activity.
Japan’s steel demand is recovering gradually with increasing exports, investment and consumption. In 2022, recoveries in consumption and investment are expected to support positive growth in all steel using sectors.
South Korea is expected to see its steel demand recovering to the 2019 level in 2021, supported by improving exports and investment in manufacturing facilities.
India’s economy was shocked by a more severe Covid wave in April-June 2021, which caused output across all sectors to fall. But since July a healthy recovery has resumed for all sectors. As a result, India’s steel demand suffered only a minor downward revision and will show a strong recovery in 2021.
Vietnam, which successfully escaped the serious economic impact of the pandemic in 2020, is looking at a scaled-down outlook for 2021 due to surging infections.
Steel demand in Latin America, except Brazil, was severely hit by the pandemic in 2020. But in 2021 a surprisingly strong recovery has been taking place, due to the construction and automotive sectors and inventory rebuilding. However, in 2022, the region could see markedly weakened momentum as it will struggle with compounded structural issues including high inflation, heightened fiscal deficits and political uncertainty.
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