Skip to main content

Worldsteel: Russia’s attack on Ukraine hits steel demand

The World Steel Association (worldsteel) expects slower demand globally this year, largely because the war in Ukraine is heightening uncertainty. The organisation’s newly published short-range outlook for 2022 and 2023 expects steel demand to grow by 0.4% this year (total of 1 840.2 million tonnes) and 2.2% (1 881.4 million tonnes) in 2023.

Máximo Vedoya, chairman of worldsteel’s economics committee, says ‘This short-range outlook is issued in the shadow of the human and economic tragedy following the Russian invasion of Ukraine. 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.’

The outlook says the magnitude of the impact of the conflict will vary across regions with an immediate devastating effect on Ukraine, consequences for Russia, and major impact on the EU due to its reliance on Russian energy and its geographic proximity to the conflict area. The forecast assumes fighting will end this year but that sanctions on Russia will largely remain.

It adds: ‘The impact will also be felt globally via higher energy and commodity prices – especially raw materials for steel production – and continued supply chain disruptions, which were troubling the global steel industry even before the war. Furthermore, financial market volatility and heightened uncertainty will undermine investment.’

It believes the war in Ukraine poses significant long-term implications for the global steel industry: possible readjustment in global trade flows; shifting energy trade; and continued reconfiguration of global supply chains.

Other observations

  • Chinese steel demand slowed in 2021 due to the tough government measures on real estate developers. Steel demand in 2022 is expected to remain flat as the government tries to boost infrastructure investment and stabilise the real estate market. ‘There is upside potential from more substantial stimulus measures, which are likely if the economy faces more challenges from the deteriorating external environment’.
  • Steel demand recovered strongly in 2021, especially in the EU and the US. ‘The impact of the war in Ukraine will be particularly pronounced in the EU due to its high dependence on Russian energy and refugee inflows.’ Steel demand in the developed world is forecast to increase by 1.1% and 2.4% in 2022 and 2023 respectively, after recovering by 16.5% in 2021.
  • Developing economies faced more challenges with the continued impact of the pandemic and surging inflation, which prompted a monetary tightening cycle in many emerging economies. After falling by 7.7% in 2020, steel demand in the developing world excluding China grew by 10.7% in 2021, slightly less than worldsteel’s previous forecast.
  • Global construction activity continued to recover from the lockdowns to record growth of 3.4% despite a contraction in China in 2021. ‘The recovery of the global auto industry in 2021 was disappointing as the supply chain bottlenecks arrested the recovery momentum in the second half of the year.’ Despite the slump in global auto production, the electric vehicle (EV) segment grew exponentially during the pandemic and the share of EVs in total car sales increased from 2.49% in 2019 to 8.57% in 2021.

Earlier story on the topic >>

Would you like to share any interesting developments or article ideas with us? Don't hesitate to contact us.

You might find this interesting too

‘Now it’s our daughters’ turn’
JX Metals sets sights on 50% recycled metals

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Subscribe now and get a full year for just €169 (normal rate is €225) Subscribe