In a world with continued high inflation, a tightening of monetary policy, an unresolved energy crisis and two significant wars underway, now is not an ideal time to be making predictions about global steel demand. Nevertheless, the World Steel Association (WSA) was duty bound to release its October update to its members who represent about 85% of global steel production. The headline figure is that steel demand is forecast to grow by 1.8% in 2023 to reach 1,814.5 million metric tonnes (Mmt) after contracting by 3.3% in 2022. In 2024, steel demand will see a further increase of 1.9% to 1,849.1 Mmt. Commenting on the outlook, Máximo Vedoya, chairman of the WSA´s Economics Committee, said: “Since the second half of 2022, the activities of steel-using sectors have been cooling sharply in most regions as both investment and consumption weakened. The situation continued into 2023, particularly affecting the EU and the US. Considering the delayed effect of the tightening in monetary policy, we expect

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steel demand recovery in 2024 to be slow in the advanced economies. Emerging economies are expected to grow faster than developed economies.”

The star of the show will be India whose positive figures will stand in sharp contrast to those of its larger trading partners. After growth of 9.3% in 2022, steel demand is forecast to rise by 8.6% in 2023 and by 7.7% in 2024. The report expects strong demand in India’s construction sector to be driven by government spending on infrastructure and a recovery in private investment. Strong momentum will also continue in automotive. This overall robust expectation for India chimes with the International Monetary Fund´s recent upward revision of India´s GDP growth forecast to 6.3% for this year and again in 2024. Meanwhile, the WSA anticipates China´s steel demand for 2023 will increase by just 2%: and by the same amount in 2024. However, the report assumes the central government will introduce measures to support the economy and that there is a downside risk for both 2023 and 2024 if the stimulus is weaker than expected. In the United States, declining residential construction activity is likely to be offset by a recovery in the automotive sector and strong infrastructure projects prompted by the government´s economic recovery bills. After a fall of 2.6% in 2022, steel demand in the United States is forecast to decline by 1.1% in 2023 and then grow by 1.6% in 2024.

The situation is somewhat worse in Europe. Following a fall of 7.8% in 2022, steel demand is expected to fall again by 5.1% in 2023. It´s clear the Russia-Ukraine war, high interest rates and energy costs have taken a heavy toll upon manufacturing: with Germany in a particularly difficult position with both a manufacturing recession and a housing crisis. The effect of all this was brought to light in October when Eurofer, the European Steel Association, published data showing that apparent steel consumption declined for a fifth consecutive quarter in Q2 of this year, deepening the sector’s recession with a 7.6% year on year reduction to 35.6 million tonnes. The European steel industry body now expects 2023’s full-year consumption to be down by 5.2%. This would mark the fourth annual recession in the last five years.

MEPS research shows that steelmakers across Europe are now implementing or planning production cuts in a bid to maintain their prices amid weak demand. Europe’s average hot rolled coil price has declined 27% since April. Rebar prices have declined 20% in the same period.

“The perspectives for the European steel sector get gloomier every quarter amidst disruptive wars, global tensions….and historically high import shares which are strangling manufacturing,” said Eurofer´s director general, Axel Eggert. Europe´s predicted rebound of 7.6% in steel consumption in 2024 is heavily conditional on “still very uncertain positive developments,” Eggert added. As we stated at the outset: now is not a great time to be making predictions.