Worldsteel releases Short Term Steel Demand Forecast for April 2024

Press Release - Worldsteel releases Short Term Steel Demand Forecast for April 2024

9 April 2024 | London, United Kingdom 

Worldsteel today released its latest short term (2024-2025) steel demand Forecast.
According to the report, global steel demand will rebound by 1.7% to 1.793 billion tons in 2024.
In 2025, global steel demand will increase by 1.2% to 1.815 billion tons.

Commenting on the forecast results, Dr. Martin Theuringer, Chair of Worldsteel's Market Research Committee, said: "Since the COVID-19 crisis in 2020, the steel market has experienced two years of negative growth and significant volatility. We expect that from 2024 to 2025, global steel demand will show a sustained growth trend.

The global economy has remained resilient despite multiple headwinds, including the fallout from the COVID-19 pandemic and the Russia-Ukraine war, high inflation, high costs and reduced household purchasing power, heightened geopolitical uncertainty, and significant monetary tightening.
As the monetary tightening cycle draws to a close, we note that tightening credit and rising costs have led to a sharp slowdown in residential construction sector activity in most major markets and hampered global manufacturing.
While the world economy appears set for a soft landing after this monetary tightening cycle, we expect global steel demand growth to remain weak and market volatility to remain high due to the lagged impact of monetary tightening, stubbornly high costs, and high geopolitical uncertainty."

We expect China's steel demand in 2024 to remain roughly at 2023 levels, although the decline in real estate investment will lead to a corresponding contraction in steel demand, but infrastructure investment and manufacturing demand growth will offset the decline in real estate.
In 2025, China's steel demand will return to the downward trend, with demand expected to decline by 1%. The forecast indicates that by 2025, China's steel demand will be significantly lower than the peak demand in 2020, and this forecast is also in line with our judgment that 1 China's steel demand peak has passed, as China gradually moves away from an economic development model that relies on real estate and infrastructure investment
Demand for steel is likely to continue to fall in the medium term.

Our estimate of China's apparent steel consumption in 2023 is based on China's official statistics, which show a 3.3% decline in China's apparent steel consumption, which is about 5 percentage points lower than our October 2023 forecast.
China's steel demand in the fourth quarter of last year was indeed weaker than the October 2023 version of the forecast, however, the main steel sector indicators suggest that actual steel demand is better than expected apparent consumption.

Between 2024 and 2025, global steel demand (excluding China) will show relatively strong broad-based growth of 3.5% per year.

Since 2021, India has become the strongest driver of steel demand growth, thanks to the continued growth of the all-purpose steel industry, especially the continued strong growth of infrastructure investment, India's steel demand will continue to grow by 8% between 2024 and 2025. India's steel demand in 2025 is expected to be nearly 70 million tons more than in 2020.

Following a sharp slowdown in 2022-2023, steel demand in other emerging economies such as the Middle East and North Africa and ASEAN is expected to accelerate in 2024-2025.
In ASEAN, growing difficulties such as political instability and declining competitiveness could lead to slower steel demand growth in the future.

Steel demand in developed economies is expected to grow by 1.3% in 2024 and 2.7% in 2025, as we expect a substantial recovery in EU steel demand in 2025 and continued resilience in the United States, Japan and South Korea.
 

The EU and the UK remain the regions facing the greatest challenges. The region, and the steel industry in particular, faces challenges from geopolitical changes and uncertainties, high inflation, monetary tightening and the withdrawal of some fiscal support, as well as high energy and commodity prices. The continued impact of these downward factors has led to a significant drop in steel demand in 2023 to the lowest level since 2000, and a significant downward revision of the 2024 forecast. After only a technical rebound in 2024, steel demand in the region will finally see a significant recovery in 2025, with a projected growth of 5.3%. Steel demand in the EU in 2024 is expected to be only 1.5 million tonnes higher than the trough reached during the COVID-19 pandemic in 2020.

In stark contrast to the EU, steel demand in the US continues to show healthy steel demand fundamentals. In 2023, steel demand in the United States fell sharply due to the slowdown in the housing market.
Thereafter, due to strong investment activity (boosted by the Inflation Reduction Act) and a gradual recovery in real estate activity, steel demand in the United States is expected to quickly return to growth in 2024.

Development trend of steel industry
High interest rates and high construction costs have led to a downturn in the residential construction sector, dragging down demand in most major steel consuming regions.

Residential sector activity fell sharply in the United States, China, Japan and the European Union in 2023, and weak residential sector conditions are expected to continue in most major markets through 2024 due to prolonged monetary tightening effects. A substantial recovery in the residential construction sector is expected to begin in 2025.

Weak global manufacturing activity due to high costs, high uncertainty, tighter financing conditions, and weak global demand are also impeding the growth of global steel demand in 2023.
Leading indicators suggest that global manufacturing activity will begin to recover in 2024. The automotive industry has been a notable exception to the overall weakness in the manufacturing sector, and is finally poised for a long-overdue strong recovery in 2023, thanks to the release of pent-up demand and an easing of supply chain constraints. After a year of strong double-digit growth in all major auto producing countries, the industry in most countries is expected to show weak growth at best in 2024.

Strong investment activity in the manufacturing and public infrastructure sectors underpins global steel demand in 2023. Against the backdrop of heightened geopolitical tensions, the ambition of major economies to develop strategic industries and ensure the security of supply of strategic components and materials is driving investment in the manufacturing sector.
We believe that the green transformation of the world economy requires an economic transformation of unprecedented scale, which is one of the main factors behind the strong investment in the public infrastructure sector. For example, a recent study by the Worldsteel Association's Market Research Committee suggests that new wind power installations will drive a threefold increase in global steel demand to around 30 million tonnes by 2030, compared to the early 1920s. While the wind industry's share of total global demand for steel is relatively low, it has the potential to provide fairly significant support to overall steel demand in regions such as Europe.

It is worth noting that public infrastructure investments aimed at strengthening infrastructure, resilience to increasing climate change risks and post-disaster reconstruction are the main factors supporting steel demand in 2023 in some of the major steel-using countries, such as Japan, China, South Korea and Turkey.

Investment in public infrastructure and manufacturing will remain strong. However, high construction costs and labor shortages are major constraints in many major economies, which may constrain further growth in public infrastructure investment and manufacturing investment in the near term.

Risks

Since the release of the October 2023 forecast results report, the risks have now eased and are in balance.

On the plus side, with faster-than-expected inflation suppression and the ensuing further easing of monetary policy, this could significantly boost the steel industry, especially the residential construction industry. In addition, the acceleration of global decarbonization actions or the strengthening of public infrastructure to protect against the increasing risks of climate change pose significant positive risks, helping to support global steel demand forward.

On the downside, significant risks such as further escalation of geopolitical tensions, inflationary pressures proving more persistent than expected, and high and rising public debt levels that have triggered fiscal consolidation in major economies are bound to slow or even disrupt the ongoing economic recovery.

Editor's note

Worldsteel is one of the world's largest and most active trade associations, with members in all major steel-producing countries.
Worldsteel not only represents steel production enterprises, but also represents national and regional steel industry associations and steel research institutes.
Worldsteel's members account for about 85 percent of global steel production. The Short-term Steel Demand Forecast (SRO) includes forecast reports, estimates and other information.

Although these predictive results represent our current judgment of future steel demand, their results are subject to risks and uncertainties and may differ materially from actual steel demand.
Readers are cautioned not to place undue reliance on these forward-looking results, which currently represent Worldsteel's views only as of the date of these forecast results