The Brussels-based World Steel Association (Worldsteel) is forecasting that steel demand will grow by 4.5 percent in 2021 compared with the prior year. Also, as part of its Short-Term Outlook, the industry association says in 2022 steel demand will see a further increase of 2.2 percent, with the world’s mills making more than 1.89 billion tons of steel next year.
“The current forecast assumes that, with the progress of vaccinations across the world, the spread of variants of the COVID-19 virus will be less damaging and disruptive than seen in previous waves,” the association writes.
“2021 has seen a stronger than expected recovery in steel demand, leading to upward revisions in our forecast across the board, except for China,” comments Saeed Ghumran Al Remeithi, chair of the Worldsteel Economics Committee. “Due to this vigorous recovery, global steel demand outside China is expected to return earlier than expected to its prepandemic level this year.”
Worldsteel cites strong manufacturing activity bolstered by pent-up demand as a main contributor. Al Remeithi says, “The developed economies have outperformed our earlier expectations by a larger margin than the developing economies, reflecting the positive benefit of higher vaccination rates and government support measures. In the emerging economies, especially in Asia, the recovery momentum was interrupted by the resurgence of infections.”
He continues, “High backlog orders combined with a rebuilding of inventories and further progress in vaccinations in developing countries [means] we expect steel demand will continue to recover in 2022.” AL Remeithi adds, however, “Persistent rising inflation, continued slow vaccination progress in developing countries and further growth deceleration in China all pose risks to this forecast.”
Worldsteel notes that in China “there have been marked signs of deceleration in the steel using sector's activity since July, leading to a steel demand contraction of 13.3 percent in July and then 18.3 percent in August.
Seasonal factors are at play, says the association. “However, more substantive causes include the slowing momentum in the real estate sector and the government cap on steel production,” writes Worldsteel. “Real estate activity has weakened due to tough government measures on developers' financing introduced in 2020. No growth in [Chinese] steel demand is expected in 2022, with the real estate sector remaining depressed in line with the government policy stance on rebalancing and environmental protection”
The outlook in many ferrous-scrap-consuming nations with higher percentages of electric arc furnace (EAF) mills is more optimistic. “In the United States, the economy continues its robust recovery, driven by pent-up demand and a vigorous policy response. The level of real GDP (gross domestic product) exceeded its previous high in the second quarter of this year,” says Worldsteel.
“The strong positive trend in the Turkish economy that started in the third quarter of 2020 continued in 2021, driven by domestic demand with expanding consumer loans,” Worldsteel writes. “Turkish steel demand will continue to show high double-digit growth in 2021, driven by infrastructure projects and industrial activity. Turkey’s steel demand will exceed the pre-currency crisis level of 36 million metric tons in 2022,” predicts the association.
South Korea is expected to see its steel demand recovering to the 2019 level in 2021, supported by improving exports and investment in manufacturing facilities. The construction sector will be supported by public civil engineering programs and residential construction recovery, switching to positive growth in 2021 and 2022, according to Worldsteel.
“Since July, a healthy recovery has resumed for all [economic] sectors,” Worldsteel says of India. “As a result, India's steel demand suffered only a minor downward revision [in 2020] and will show a strong recovery in 2021. India’s steel demand will reclaim the 100 million metric tons mark this year.”