WSD Strategic Insights CXLIV: Steel production in 2050

Tuesday, 20 April 2021 00:44:05 (GMT+3)   |   San Diego
       

The International Energy Agency (IEA) and World Steel Dynamics (WSD) steel production estimates for 2050 are not very different.   

  • The IEA figure for 2050 is 2.050 billion tonnes versus 1.872 billion tonnes in 2019 – a 0.3% per annum compounded gain over the 31-year time frame.
  • The WSD figure calls for 2050 production of 1.984 billion tonnes – a 0.2% per annum gain, compounded, over the same period.
Crude steel production by major steel producing regions, 2019 vs 2050 
  IEA WSD IEA WSD
  2019 2050 2019 2050 Change vs 2019
China 996 710 996 800 -286 -196
USA 88 80 88 80 -8 -8
Middle East 54 100 54 74 46 20
Europe 157 148 157 148 -9 -9
India 107 350 111 300 243 189
Central & South America 29 50 29 40 21 11
Africa 6 20 6 11 14 5
Rest of World 435 592 425 531 157 106
Total 1,872 2,050 1,866 1,984 178 118
Source: WSA, IEA, WSD Estimates            

Steel production by country and region

However, there are several significant differences in the forecasts when considering several countries and/or regions – especially in the case of China and India: 

  • China.  Versus output of 996 million tonnes in 2019, the IEA figure is 710 million tonnes – a decline of 1.1% per annum, compounded – versus the WSD’s estimate of 800 million tonnes (a drop of 0.7% per annum, compounded).  Chinese steel production will be receding in the next several decades, it’s believed, as: a) the country’s fixed asset investment declines from the roughly 44% share of GDP at present (that is difficult to sustain because of the rise in municipalities’ debt); b) household spending rises as a share of GDP (the most important economic stimulant in the future); and c) the country’s net exports rise in line with GDP.

Currently, China is consuming about 1.0 billion tonnes of steel on a crude steel basis.  Given its 1.3 billion inhabitants, consumption per capita is about 770 tonnes.  For the USA, steel consumption is about 110 million tonnes per year at present and it has 330 million inhabitants; hence, steel consumption is about 333 tonnes per capita.  GDP per capita in China is about $11,000 per annum, with the USA at about $64,000 per annum. 

The most amazing steel demand discrepancy between China and the USA occurs in rebar.  For the USA, the current figure is about 8 million metric tonnes per annum.  For China, the current figure may be 270 million tonnes when including some unreported output.  The Chinese figure in part reflects the country’s excessive infrastructure spending and booming residential construction activity.

  • India.  The IEA forecast for 2050 is 350 million tonnes, or a 3.9% per annum compounded gain from 106 million tonnes in 2019.  The WSD figure is 300 million tonnes, for a rise of .34% per annum compounded.  WSD views the Indian economy as being fairly fragile on a longer term basis, although its financial system is “Western” in many respects.  The expansion of Indian steelmaking capacity as expected will require both enormous new funds and a massive rise in steel demand.  However, the funds for projects that boost steelmaking capacity may be more difficult to obtain than in the past because of the massive funds required to curb CO2 emissions.

Looking ahead to 2050, the industry’s estimated capital spending requirement may amount to $782 billion – or an average of $26 billion per year.  This figure presumably does not include “normal” capital expenditures at steel plants that, in 2020, might have been about $135 billion ($75 billion in China and $60 billion elsewhere). 

By 2050, all steel plants – even the traditional BF/BOF and scrap-based/EAF ones – will have been the recipient of sizable investments to reduce the generation of CO2 during the production process and/or by capturing and processing it. 

 

 

 

 

 

This report includes forward-looking statements that are based on current expectations about future events and are subject to uncertainties and factors relating to operations and the business environment, all of which are difficult to predict.  Although we believe that the expectations reflected in our forward-looking statements are reasonable, they can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties, including among other things, changes in prices, shifts in demand, variations in supply, movements in international currency, developments in technology, actions by governments and/or other factors.

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Tags: China Far East 

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