The World Steel Association said June 4 it expects annual demand for steel to fall by 6.4% to 1.65 billion mt this year before recovering close to pre-pandemic levels in 2021, led by China and the construction sector.
“The decline in steel demand in most countries will be less severe than during the global financial crisis as the consumption, which have been hit hardest, is less steel-intensive,” said Edwin Basson, worldsteel general director during a video conference to its Short Range Outlook report. “In many developed economies, steel demand was already at a low level, having still not fully recovered from 2008.”
The association sees annual steel consumption recovering to 1.72 billion mt in 2021, just shy of levels of demand in 2019.
Steel industries have been hit by a general freeze in consumption, shutdowns and disrupted supply chains caused by the Coronavirus pandemic. Demand is expected to have declined significantly in most countries, especially during the second quarter, with consumption improving slowly as lock downs ease in the second half of the year, said the association.
Reductions in global steel demand will be mitigated somewhat by a faster recovery in China. The world’s second-largest economy is fast approaching normalization, except for the hospitality and tourism sectors. By the end of April, all major steel-using sectors in China were back to near full productivity, with demand expected to grow by 1% this year.
Europe, North America, India and steel markets in developing Asia are expected to take longer to rebound, said Basson.
Construction recovery
The association predicted that the construction sector in China could be a “useful” tool for the government to sustain the demand recovery in the economy. Automotive and mechanical industries have taken the biggest hit from the crisis among the steel-using sectors. Car making was already seen under pressure from the transition to electric vehicles and government policies to reduce passenger transport density in cities. The automotive industry is expected to see a 20% drop in sales this year and a recovery to pre-crisis levels of activity could take several years, said the association.
Mechanical machinery manufacturers will also be hit by a substantial decline in demand this year as investment projects are put on hold, or cancelled.
The worldsteel outlook was postponed and released in June due to the uncertainties created by the pandemic. The association is expected to release another outlook in October.
— Annalisa Villa
