The World Steel Association (worldsteel) has released an update of its Short Range Outlook for 2022 and 2023, forecasting that steel demand will contract by 2.3 percent in 2022 to 1.79 billion mt. In 2023, steel demand is forecast to recover by one percent, totaling 1.81 billion mt. In the previous forecast, steel demand had been expected to increase by 0.4 percent in 2022 to 1.84 billion mt.
“The global economy is affected by persisting inflation, US monetary tightening, China’s economic deceleration, and the consequences of Russia’s invasion of Ukraine. High energy prices, rising interest rates, and falling confidence have led to a slowing in steel-using sectors’ activities. The prospect for 2023 depends on the impact of tightening monetary policies and central banks’ ability to anchor inflation expectations,” Máximo Vedoya, chairman of the worldsteel economics committee, commented with regard to the outlook.
In its regional analysis, worldsteel said China’s steel demand in 2022 is likely to fall by four percent amid repeated lockdowns and the slump in the property market. China’s steel demand in 2023 is expected to remain flat under the assumption that small new stimulus measures are to be introduced and lockdown measures will be largely removed in the later part of 2022.
Many developing economies, especially energy-importing ones, are experiencing more acute inflation and monetary tightening cycles. Still, steel demand in the fast-growing Asian developing economies, like India and the ASEAN region, will maintain high growth. On the other hand, following an exceptional rebound in 2021, steel demand in many South and Central American countries will see a contraction in 2022, with slowing construction. In Turkey, the lira’s depreciation and high inflation are hurting its construction activities, leading to a contraction of steel demand in 2022 and only a limited rebound in 2023. Despite heavy sanctions imposed on Russia, steel demand in 2022 is expected to contract less than what was forecast at the beginning of the war, mainly due to high oil prices and government support measures for construction. In 2023, Russia’s steel demand is expected to see a deeper contraction as the sanctions become more biting over time. Steel demand in Ukraine will contract more than 50 percent in 2022, but a partial recovery is expected in 2023 on the back of reconstruction activities.
Steel demand in the advanced economies recovered by 16.4 percent in 2021 from the pandemic dip of 12.3 percent and is expected to fall by 1.7 percent in 2022 and recover by 0.2 percent in 2023.
Regarding the steel-using sectors, the post-lockdown recovery in construction activity was hindered first by supply bottlenecks and then surging materials costs. Global construction activity is facing further challenges in the coming years as interest rates start to rise across many regions.