Demand for steel worldwide will witness a 2.3 per cent growth in 2023 and 1.7 per cent in 2024, the World Steel Association (worldsteel), a body with membership of every steel producing country, has said.

In its short range outlook released earlier this week, worldsteel said the demand will increase to 1,822 million tonnes (mt) in 2023 and 1,854 mt in 2024. The association pegged 2022 crude steel at 1,831.5 mt, down 4.3 per cent compared with 2021.

“Manufacturing is expected to lead the recovery, but high interest rates will continue to weigh on steel demand. Next year, growth is expected to accelerate in most regions, but deceleration is expected in China,” worldsteel said.

Worse-than-expected contraction

The association quoted Máximo Vedoya, CEO of Ternium and Chair of the worldsteel Economics Committee, as saying, “in 2022, recovery momentum after the pandemic shock 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. This, combined with the effect of stock adjustments, led to worse than expected contraction in steel demand.”

The association said persistent inflation and high-interest rates in most economies will limit the recovery of steel demand in 2023, despite positive factors like China’s reopening, Europe’s resilience in the face of the energy crisis, and the easing of supply chain bottlenecks. 

In 2024, demand growth will be driven by regions outside China, but it will face global deceleration due to “China’s anticipated 0 per cent growth”, overshadowing the improved environment. “Sustained inflation remains a downside risk, potentially keeping interest rates high,” it said.

India on a healthy growth track

In its India outlook, the worldsteel said it “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, it said. 

“The residential sector is also expected to grow, backed by affordable housing projects and urban demand. Private investment is improving on the back of the Production-Linked Investment (PLI) Schemes.” worldsteel said.

India’s capital goods sector is expected to benefit from the momentum in infrastructure and investment in renewable energy. Automotive and consumer durables are expected to maintain healthy growth driven by sustained growth in private consumption, the outlook said.

After 8.2 per cent growth in 2022, demand is expected to show a healthy growth of 7.3 per cent in 2023 and 6.2 per cent in 2024, the association projected.

Moderate growth in China 

The outlook said Chinese steel demand contracted in 2021 and 2022 as its economy decelerated sharply due to unexpected lockdowns that extended across the country.

The negative momentum in the construction sector that was seen in 2021 intensified in 2022. While the sector will rebound moderately in 2024, the infrastructure sector may continue to benefit from government support. 

China’s manufacturing sector may recover moderately in 2023-24, while the automotive industry’s performance may be weak, it said. China’s total steel demand is expected to grow by 2 per cent in 2023 and stay flat in 2024.

 Developed economies’ prospects

After suffering a sizable contraction in 2022 due to monetary tightening and high energy costs, steel demand in the developed economies is expected to increase by 1.3 per cent in 2023 and 3.2 per cent in 2024.

The European Union will continue to feel the impact of the Ukraine war in 2023 and will witness a rebound in steel demand in 2024.

In the US, growth in 2023-2024 is expected to be subdued by recessionary pressure, the outlook said, adding that the spillover from the recent SVB bankruptcy needs to be watched.

The US steel demand is expected to grow by 1.3 per cent in 2023 and 2.5 per cent in 2024. In Japan, demand is expected to increase by 4.0 per cent in 2023 and 1.2 per cent in 2024. South Korea will see demand rising by 2.9 per cent this year and two per cent in 2024. 

Russia, CIS chances bleak

Steel demand in the ASEAN region will increase by 6.2 per cent in 2023 and 5.7 per cent in 2024. In West Asia and North Africa, the demand will grow by 0.6 per cent in 2023 and 3.4 per cent in 2024, worldsteel said.

The chances of demand rising in Russia and the Commonwealth of Independent States are bleak as it is likely to decline by 3.5 per cent in 2023 and 4.3 per cent in 2024, the outlook said.   

After falling by 8.7 per cent in 2022, the total steel demand in the region is expected to fall by a further 3.5 per cent in 2023 and then by 4.3 per cent in 2024.

In Latin America, Mexico will witness over six per cent increase in demand in 2023 and 2024, while the prospects in Brazil are subdued due to tight monetary policy and fiscal uncertainty, the outlook said.