On October 19, the World Steel Association (WSA) released its latest short-term (2022-2023) steel demand forecast report. Global steel demand will fall 2.3% to 1.7967 billion tons in 2022, following a 2.8% increase in 2021, the report showed. Will edge up 1.0% to 1,814.7 million tons in 2023.
The World Steel Association said the revised forecast, made in April, reflected difficulties for the global economy in 2022 due to high inflation, monetary tightening and other factors. Still, infrastructure demand could lead to a small increase in steel demand in 2023.
China’s steel demand is forecast to fall by 4.0 per cent in 2022
2023 or a small increase
China’s steel demand contracted 6.6 percent in the first eight months of the year and is expected to fall 4.0 percent for the full year in 2022 due to low base effects in 2021.
According to the report, China’s steel demand initially recovered in the second half of 2021, but the recovery was reversed in the second quarter of 2022 due to the spread of COVID-19. The housing market is in deep decline, with all major property market indicators in negative territory and the amount of floor space under construction shrinking. However, China’s infrastructure investment is now recovering thanks to government measures and will provide some support for steel demand growth in the second half of 2022 and 2023. But as long as the housing slump continues, Chinese steel demand is unlikely to rebound much.
New infrastructure projects and a weak recovery in China’s property market, as well as modest government stimulus measures and a relaxation of pandemic controls, are likely to drive a small, steady increase in steel demand in 2023, according to WSA. If these conditions are not met, downside risks will remain. In addition, the global economic slowdown will also pose downside risks to China.
Steel demand in advanced economies will fall by 1.7 per cent in 2022
It is expected to recover 0.2% in 2023
Steel demand growth in advanced economies is expected to decline by 1.7 percent in 2022 and recover by 0.2 percent in 2023, after recovering from a low 12.3 percent to 16.4 percent in 2021, according to the report.
Eu steel demand is expected to contract by 3.5% in 2022 and continue to contract in 2023. In 2022, geopolitical conflicts further exacerbated issues such as inflation and supply chains. Against the backdrop of high inflation and the energy crisis, the economic situation facing the European Union is extremely serious. High energy prices have forced many local factories to close, and industrial activity has fallen sharply to the brink of recession. Steel demand will continue to contract in 2023, with tight gas supplies in the European Union not expected to improve any time soon, the World Steel Association said. If energy supplies were disrupted, the EU would face serious economic downside risks. If economic constraints continue at current levels, there could also be long-term consequences for the EU’s economic structure and steel demand. However, if the geopolitical conflict ends soon, it will provide an economic upside.
Us steel demand is not expected to contract in 2022 or 2023. The report argues that the Fed’s stimulative policy of raising interest rates to fight inflation will put an end to the strong recovery the U.S. economy has maintained amid the coronavirus pandemic. Manufacturing activity in the country is expected to cool sharply due to a weak economic environment, a strong dollar and a shift in fiscal spending away from goods and services. Still, the U.S. auto industry is expected to remain positive as demand builds and supply chains unclog. The US government’s new infrastructure law will also boost investment in the country. As a result, steel demand in the country is not expected to contract in spite of the weakening economy.
Japanese steel demand recovered moderately in 2022 and will continue to do so in 2023. Rising raw material costs and labor shortages have slowed Japan’s construction recovery in 2022, weakening the country’s steel demand recovery, the report said. However, Japan’s steel demand will maintain a moderate recovery in 2022, supported by the non-residential construction sector and the machinery sector; The country’s steel demand will also continue to recover due to rising auto industry demand in 2023 and reduced supply chain constraints.
Forecasts for steel demand in South Korea have turned out poorly. The World Steel Association expects South Korean steel demand to decline in 2022 due to contraction in facility investment and construction. The economy will recover in 2023 as supply chain problems in the auto industry abate and ship deliveries and construction demand pick up, but the manufacturing recovery will remain limited by the weakening global economy.
Steel demand varies in developing economies except China
Many developing economies outside China, especially energy-importing ones, are experiencing an increasingly severe cycle of inflation and monetary tightening earlier than developed economies, the CISA said.
Despite this, Asian economies excluding China will continue to grow rapidly. The report pointed out that Asian economies except China will maintain high growth in steel demand in 2022 and 2023 under the strong support of domestic economic structure. Among them, India’s steel demand will show faster growth, and will also lead to the country’s capital goods and automobile demand growth; Steel demand in the ASEAN region is already showing strong growth as local infrastructure projects are carried out, with strong growth expected to occur mainly in Malaysia and the Philippines.
Steel demand growth in Central and South America is expected to decelerate sharply. In Central and South America, the report said, in addition to high domestic inflation and interest rates, monetary tightening in the United States will also put additional pressure on the region’s financial markets. Steel demand in many Central and South American countries, which rebounded in 2021, will contract in 2022, with destocking and construction decelerating markedly.
In addition, demand for steel in the Middle East and North Africa region will remain resilient as oil exporters benefit from high oil prices and Egypt’s huge infrastructure projects. Construction activity in Turkey is affected by the depreciation of the lira and high inflation. Steel demand will contract in 2022 and is expected to appear in 2023
Post time: Oct-31-2022