Oct 14, 2021
Worldsteel revises demand forecast down
2022-07-04
Global steel demand is expected to increase by 4.5pc on the year in 2021 to 1.85bn t, industry association Worldsteel said today.
This is a downgrade from the April forecast, when the organisation foresaw a 5.8pc rise, underpinned by softer Chinese appetite.
Worldsteel expects Chinese demand to decrease by 1pc on the year, which compares to a 3pc growth forecast previously. Demand was strong in the first half of the year, but has decelerated by double digits in July-August, as a result of a sluggish real estate activity and infrastructure investment. A global pick-up in production has slowed Chinese exports too.
These trends will continue over 2022, according to Worldsteel, and demand is expected to remain at the same level as in 2021, although some restocking might support apparent steel use.
But the association expects the rest of the world to perform more strongly this year, with demand now forecast to grow by 11.5pc, up from 9.3pc in the April short-range outlook.
Developed
Developed economies will boost global demand, with growth projected at 12.2pc for 2021, driven by the EU and North America.
Demand in the EU will rise by 12.7pc, although it is held back by bottlenecks in the automotive industry supply chain. The German market is supported by exports, but affected by the slowdown in the automotive segment, while activity in the construction and home appliances sector in Italy is to recover to pre-Covid 19 levels.
The association has revised up its forecast for the US, Mexico and Canada sharply, from a 7.6pc increase in demand expected in April to 13.7pc now. Recovery in the US continues, driven by policy changes and pent-up demand.
Elsewhere, in Japan and South Korea Worldsteel sees demand continuing to recover, boosted by government infrastructure programmes and global trade. Exports are increasing, as are investment and consumption, while automotive and machinery manufacturing is leading the recovery in Japan.
Developing
Developing countries' steel demand has continued to recover in 2021, aided by rising international trade and commodity prices. Demand is forecast to increase by 11pc in 2021 and by 5pc in 2022.
But high Covid-19 infection rates, low vaccination levels and a sluggish recovery in international tourism continue to weigh on developing economies. In 2022 as vaccinations progress, demand is expected to improve but the pandemic will leave a lasting impact, Worldsteel said.
While poised for a strong recovery from strict lockdowns in 2020, India recorded a severe second Covid wave in April-June 2021, which caused demand to falter. Still, the economic impact of the second wave was much less severe than that of the first. Since July, a healthy recovery has resumed in all sectors, but India's demand forecast fell slightly to 16.7pc growth in 2021, down from Worldsteel's April estimate of 19.8pc. Vietnam's demand forecast has also been revised down owing to surging infection rates, and it is now expected to grow by 2.4pc in 2021, down from estimates of 5pc growth earlier in the year.
Elsewhere, the Latin American outlook is mixed after a strong recovery so far this year led by the automotive and construction sectors. In 2022 the region could lose momentum because of structural issues, such as high inflation and political uncertainty. Demand is forecast to rise by 23.2pc in 2021 but slow to a 0.9pc increase in 2022.
Turkish steel demand will show strong growth in 2021, forecast to rise by 17pc, supported by infrastructure and industrial output. Steel demand is expected to surpass pre-currency crisis levels in 2022, rising by 7.2pc to exceed 36mn t.
By Lora Stoyanova and Sam Angell
Source: Argus
