Growth in global steel demand in 2021 reduced due to China

The World Steel Association (worldsteel) today released an updated version of its short-term forecast (SRO) for 2021 and 2022. Worldsteel predicts that steel demand will grow by 4.5% in 2021 to reach 1,855.4 million tonnes after rising 0.1% in 2020. Steel demand will rise 2.2% in 2022 to 1,896.4 Mt. Current projections suggest that as vaccination continues to evolve around the world, the spread of the COVID virus will be less devastating and destructive than in previous waves.

Commenting on the outlook, Mr Al Remeiti, Chairman of the Global Steel Economics Committee, said: “Stronger than expected recovery in steel demand is expected in 2021, which will lead to an upward revision of our forecast in all directions except China. ... With this robust recovery, global steel demand outside of China is expected to return to its pre-pandemic level earlier than expected this year.

The main factor is vigorous production activity, supported by deferred demand. Developed countries exceeded our previous expectations by a wide margin than developing countries, reflecting the positive benefits of higher vaccination rates and government support measures. In emerging economies, especially Asia, recovery has been interrupted by the resurgence of infections.

While the manufacturing sector recovery remained more resilient to new waves of contamination than expected, supply-side constraints have flattened the recovery in the second half of the year and impeded a stronger recovery in 2021. But with a large backlog of orders, we expect that, coupled with a recovery in stocks and further progress in vaccinations in developing countries, steel demand will continue to rebound in 2022.

Steady rise in inflation, continued slow progress in vaccinations in developing countries and further slowdown in growth in China all pose risks to this projection. ”

China

The Chinese economy maintained a strong recovery momentum from 2020 to early 2021. However, it has slowed down since June. Since July, there have been clear signs of slowing activity in the steel sector, resulting in a 13.3% contraction in steel demand in July and then 18.3% in August. The sharp slowdown is attributed in part to random factors such as recent unfavorable weather and small waves of infections this summer, but more significant reasons include a slowdown in real estate growth and government restrictions on steel production. The decline in activity in the real estate sector is associated with the introduction in 2020 of tough government measures to finance developers. infrastructure investment did not increase in 2021 due to depletion of investment opportunities and limited financial capacity of local governments. In addition, a strong recovery in production around the world has led to shrinking export markets.

Compared to the high level of last year and the continuing negative trend in the real estate sector, steel demand in China will grow negatively until the end of 2021. As a result, while the apparent use of steel from January to August still remains at a positive level of 2.7%. , total steel demand is expected to decline by -1.0% in 2021.

Steel demand is not expected to grow in 2022, while the real estate sector will remain depressed in line with the government's rebalancing and environmental policies. Certain restocking operations may contribute to the apparent use of steel. Recent government moves to move away from the real estate-dependent growth model are likely to continue.