(HSV VIETNAM GROUP) – The World Steel Association (Worldsteel) recently released a report updating the short-term outlook on steel demand for 2023 and 2024. Worldsteel forecasts that steel demand will increase by 1.8% in 2023 and reach more than 1.8 billion tons after decreasing by 3.3% in 2022. In 2024, steel demand will increase further 1.9% to 1.85 billion tons.
Commenting on the outlook, Mr. Máximo Vedoya, Chairman of the World Steel Economic Committee, said steel demand is being affected by an inflationary environment and high interest rates. Since the second half of 2022, the activity of steel-using industries has dropped sharply. The situation continues into 2023, especially affecting the EU and the US.
"Based on the lag of tightening monetary policy, we expect a slow recovery in steel demand in 2024 in advanced economies. Emerging economies are expected to grow faster than developed economies. However, the performance of emerging economies continues to vary, with Asia still maintaining resilience," said Mr. Máximo Vedoya.
Steel demand in developed economies is expected to fall 1.8% in 2023 after falling 6.4% in 2022. Europe is particularly hard hit by monetary tightening and high energy costs. In 2024, the technical recovery will allow steel demand to grow by 2.8%.
Steel demand dynamics in emerging and developing economies continue to differ. Meanwhile, Asian economies (except China) remain resilient in the face of global headwinds. After decreasing by 0.6% in 2022, steel demand in emerging and developing economies in this region will grow by 4.1% in 2023 and 4.8% in 2024.
A downturn in the real estate market lasting until 2023 is weighing on the Chinese economy. Falling home sales have led to financial troubles for major real estate developers, creating concerns about the health of China's economy. However, the situation is expected to stabilize by the end of 2023 as the Chinese government has taken several measures to stabilize the economy since July.
Therefore, China's steel demand will record slight positive growth thanks to government measures.
Even so, China's 2024 outlook remains uncertain depending on the policy direction to address current economic difficulties.
Worldsteel notes that the Chinese economy is in a period of structural transformation and may cause further uncertainty.
Additional uncertainty could relate to conflicts between Russia and Ukraine, Israel and Palestine, as well as elsewhere. This could contribute to rising oil prices and further geoeconomic fragmentation, both of which are downside risks.
It is worth noting that although construction activity weakened due to high interest rates. Meanwhile, public investment is showing positive momentum in many regions, even in advanced economies, reflecting the effectiveness of decarbonization efforts.
Infrastructure investment growth momentum continues in 2023 thanks to efforts by governments to promote construction. Additionally, additional projects are expected to launch in the near future. As a result, infrastructure investment in both 2023 and 2024 is expected to remain moderately positive.
However, Worldsteel believes that the decline in the number of new housing and apartment projects starting in the 2021-2022 period has held back construction activities and will continue in 2024, affecting total steel demand.
Manufacturing growth momentum also weakened but maintained moderate growth in 2023, with positive growth in automobile production and strong growth in the home appliance industry. Growth momentum in the manufacturing sector could weaken further as external markets deteriorate.
“However, assuming the government will introduce additional measures to support the economy, steel demand in 2024 could remain at 2023 levels. There is a risk of price declines for both 2023 and 2024 if the stimulus effect is weaker than expected,” Worldsteel said.
Ha Diem HSV