Fitch: Steel markets will normalise in 2023, excluding China

Wednesday, 14 December 2022 14:44:33 (GMT+3)   |   Istanbul

International credit rating agency Fitch Ratings has stated that the global steel sector will not fully recover in 2023 from the supply-demand shift in favour of the end-markets amid reduced consumption in the second half of this year. Since the global economic slowdown has ended the period of exceptionally high prices supported by pent-up demand after the pandemic, Fitch expects steelmakers to have lower earnings. According to Fitch, the steel markets will normalise in 2023, excluding China, with roughly similar volume levels to 2021.

Fitch expects global steel consumption to decline by 60-65 million mt in 2022 and capacity utilization rates to drop to 77 percent from 80 percent. Noting that 20-30 million mt of the given amount will be caused by China’s steel production reduction target, the agency stated that the combined steel consumption growth in 2023 in markets such as the US, India and Southeast Asia will exceed China’s reduction target by 25-35 million mt. The agency also expects revenue growth in the global steel market to decrease by 4.2 percent in 2022 from the 46 percent recorded in 2021.

Meanwhile, Fitch pointed out that the prospects for steel companies in Europe remain bleak amid high energy prices, the impending recession, declining consumer confidence and the need to lay out supply chains for the steel sector. On the other hand, the agency noted that sentiments are more positive than their earlier assumptions for some markets such as Turkey, Brazil, India and North America, taking advantage of government support for infrastructure and protectionist trade measures.

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