The World Steel Association forecasts steel demand to edge up 0.4% in 2022 to 1.84 billion mt and grow a further 2.2% in 2023 to 1.88 billion mt, according to its Short Range Outlook released April 14.
Steel demand rose 2.7% in 2021 to 1.83 billion as recovery from the pandemic was stronger than expected in a number of regions, although there had been a sharper-than-anticipated deceleration in China, worldsteel Economics Committee Chairman Maxino Vedoya said in a statement.
“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,” Vedoya said.
The association expected reduced demand growth in 2022 due to impacts from the war in Ukraine, with further downside risks from the continued pandemic, especially in China, and rising interest rates.
“We expect growth to start coming in 2023 and this is on the presumption that the war in Ukraine will come to a conclusion sometime in this year and at least the end of this year we will begin to see a recovery in the steel use in those markets, but throughout our forecasts we have assumed that steel use in Russia and Ukraine is going to be way down from previous years, and that the impact will flow over,” worldsteel Director General Edwin Basson told a press briefing April 14.
He said the war was most likely to impact Europe due to its reliance on Russian energy and its geographic proximity, but other regions would see less of an impact depending on their direct trade and financial exposures to Russia and Ukraine.
In the EU and the UK, steel demand was expected to fall 1.3% in 2022 to 161.5 million mt due the region’s high dependence on Russian energy and refugee inflows, although demand was expected to grow 4% in 2023, the association said.
In the developed world, steel demand was expected to increase by a lower 1.1% in 2022 and 2.4% in 2023, after rising 16.5% in 2021.
There was expected to be a global impact from the war causing continued supply chain disruptions, higher energy and commodity prices, especially for steel raw materials, and financial market volatility and uncertainty undermining investment.
“The geopolitical situation surrounding Ukraine poses significant long-term implications for the global steel industry. Among them are a possible readjustment in global trade flows, a shift in energy trade and its impact on energy transitions, and continued reconfiguration of global supply chains,” worldsteel said.
It said emerging economies outside of China would face challenges from the worsening external environment, the war, and US monetary tightening, leading to low growth of 0.5% in 2022 to 484.4 million mt and 4.5% in 2023, down from a growth of 10.7% in 2021.
“The expected tightening of US monetary policies will hurt financially vulnerable emerging economies,” worldsteel said.
China demand flat in 2022
Chinese steel demand slowed in 2021 due to government measures on real estate developers and worldsteel expected demand in 2022 to remain steady at 952 million mt, as Beijing looked to boost infrastructure investment and stabilize the real estate market. These stimuli are then due to support steel demand growth of 1% in 2023 to 961.6 million mt.
“We do not see strong recovery in China, so the stabilization that we started seeing in the latter half of 2021 in China, we think will continue through for most of 2022,” Basson said.
Despite a contraction in China, the global construction industry recovered in 2021 to a record growth of 3.4% as many countries required infrastructure as part of their pandemic recovery programs, with the energy transition expected to drive the sector’s growth for many years, worldsteel said.
Inflation was a problem in many markets and could have a dampening effect on steel use, particularly in the construction markets, Basson said.
Supply chain bottlenecks
The global automotive industry remained disappointing in 2021, impacted by supply chain bottlenecks, with the war in Ukraine likely to delay any return to normal of the supply chain issues, especially in Europe, the association said.
“The continued stickiness in the supply chains, particularly in the auto industry, has still had an impact in the early parts of 2022, but as we go through the rest of the year, we expect that to dissipate and demand to normalize in those markets,” Basson said, adding that the automotive sector consumed about 12%-13% of all steel used, or around 200 million mt.
Global electric vehicle sales almost doubled year on year in 2021 to 6.6 million units, or a share of 8.6%, up from 2.5% in 2019, wordsteel said.
“What we’re seeing so far is that EVs are using the same technology as previous vehicles and in some cases use a little bit more steel to make the cars stronger for the heavier batteries they are carrying, so, so far we’ve seen no impact on steel use from EVs and I think most likely this is going to be the trend for the next number of years,” Basson said.
Steel use was also expected to play a part in automated vehicles in the future.
“Steel, if anything is going to play a stronger role into the future than in the past, so we’re quite positive about the role of steel in the automotive market and also not worried about the EV market in the steel industry,” Basson said.
— Jacqueline Holman