Steel demand bounces back after activity slump

The World Steel Association (worldsteel) expects demand to rebound by 2.3% this year and by 1.7% in 2024.

The organisation’s latest short-range outlook says manufacturing will lead the recovery but warns that high interest rates will continue to hit steel demand. Worldsteel believes global demand in 2023 will be 1 822.3 million tonnes, reaching 1 854 million tonnes in 2024.

Máximo Vedoya, ceo of Ternium and chair of the worldsteel economics committee, recalls how in 2022 recovery momentum after the pandemic was hampered by high inflation and increasing interest rates, the Russian invasion of Ukraine, and the lockdowns in China.

‘As a result, steel-using sectors’ activity went down in the last quarter of 2022,’ he says. ‘This, combined with the effect of stock adjustments, led to worse than expected contraction in steel demand.’

The outlook believes inflation and high interest rates in most economies will affect steel demand this year. ‘In 2024, demand growth is driven by regions outside China but faces global deceleration due to China’s anticipated 0% growth, overshadowing the improved environment. Sustained inflation remains a downside risk, potentially keeping interest rates high.’

It goes on: ‘Future global steel demand growth will rely on reduced drivers, primarily concentrated in Asia. Investments in decarbonisation and dynamic emerging economies will increasingly drive positive momentum for global steel demand, even as China’s contribution to global growth diminishes.’

After declining by 3.5% in 2022, China’s total steel demand is expected to grow by 2.0% in 2023 but stay flat in 2024. Demand in the developed economies fell 6.2% in 2022 but is expected to increase by 1.3% in 2023 and 3.2% in 2024.

After falling by 0.3% in 2022, steel demand in emerging and developing economies excluding China is expected to show growth of 3.6% in 2023 and 3.9% in 2024.

The outlook says India remained a bright spot in the global steel industry in 2022. ‘Having managed inflation well, the Indian economy is on a healthy growth track, with a rising share of investment in GDP thanks to strong government spending on infrastructure.’ After growth of 8.2% in 2022, demand is expected to be 7.3% in 2023 and 6.2% in 2024.

Turkey’s construction sector has been shrinking since 2018 but, with rebuilding following the earthquakes in February, is now expected to grow by 15.0%. After falling by 2.6% in 2022, steel demand is expected to increase by 7.4% in 2023 and by 6.0% in 2024.