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China recovery eases global steel headache

The World Steel Association (Worldsteel) has forecast a 6.4% contraction in steel demand this year because of the Covid-19 crisis and a 3.8% recovery in 2021. The figures are included in the organisation’s latest short-range outlook.

Worldsteel expects demand in 2020 to be 1 654 million tonnes with the 6.4% reduction mitigated by Chnia recovering from the pandemic faster than the rest of the world. The demand total in 20121 is expected to be 1 717 million tonnes.

The authors assume that countries’ lockdown measures will continue to be eased during June and July and major steelmaking economies do not suffer from substantial secondary waves of the pandemic.

Al Remeithi, who chairs the worldsteel economics committee, said the health crisis also represented ‘an enormous crisis’ for the world economy. ‘We therefore expect steel demand to decline significantly in most countries, especially during the second quarter. With the easing of restrictions that started in May, we expect the situation to gradually improve but the recovery path will be slow.’

He thought it possible that the decline in steel demand in most countries might be less severe than during the global financial crisis of 2008 because the hardest-hit sectors, notably the service industries, are less steel-intensive. ‘If the virus can be contained without second and third peaks, and if government stimulus measures are continued, we could see a relatively quick recovery,’ he adds.


Worldsteel says China’s economic recovery started in late February. By the end of April, all major steel-using sectors were back to near full productivity, even though full operation of the manufacturing sector was hindered by a collapse in export demand.

‘The recovery of steel demand will be more visible in the second half of 2020. It will be driven by construction, especially infrastructure investment, as the government has put forward several new infrastructure initiatives,’ it notes.

Recovery in manufacturing will be slower due to a severe recession in the global economy but the automotive industry is likely to be supported by incentives. ‘We expect Chinese steel demand to increase by 1.0% in 2020. We also expect that the benefit from infrastructure projects initiated in 2020 will carry over and support steel demand in 2021.’

Developed economies

Steel demand in the developed economies is expected to decline by 17.1% in 2020.  The EU contracted 5.6% in 2019 due to a sustained manufacturing recession. The manufacturing sector was pushed into a deeper recession during the lockdown with a massive fall in orders. The automotive sector is expected to be the worst hit.

In the US, the manufacturing recession is expected to reach its hit the bottom in the second quarter. Japanese steel demand has been weakening since the second half of 2019 and is expected to contract by double digits in 2020. Major Korean steel-using sectors are expected to see a double-digit decline because of falling export markets and a weak domestic economy. 


According to worldsteel, the automotive industry is the biggest victim of the crisis among steel-using sectors. In 2020 it is expected to experience a 20% loss of sales on top of those in the past two years. 

‘Recovery to pre-crisis levels will take several years due to income growth and remote working but safety concerns might boost demand for passenger cars in the short term. Furthermore, the supply disruptions may continue beyond the lockdown period as liquidity problems will deter the restart not only of car producers, but also of auto part suppliers.’

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