(HSV VIETNAM GROUP) – The World Steel Association (worldsteel) forecasts that steel demand in 2024 will increase by 1.7% to 1,793 million tons. In 2025, steel demand is forecast to increase by 1.2% to 1,815 million tons.
Commenting on the outlook, Dr Martin Theuringer, Chairman of the World Steel Economics Committee said, “after two years of negative growth and severe market volatility since the COVID crisis of 2020, we see early signs of global steel demand stabilizing on a growth trajectory in 2024 and 2025.
The global economy continues to demonstrate resilience despite facing strong headwinds, lingering impacts from the pandemic and the Ukraine-Russia conflict, high inflation, high costs and falling household purchasing power, rising geopolitical instability and monetary tightening. As this tightening cycle comes to an end, we see that tighter credit conditions and higher costs have led to a sharp decline in housing activity in most major markets and hampered the manufacturing sector globally. Although it appears the world economy will have a soft landing from this monetary tightening cycle, worldsteel predicts global steel demand growth to remain weak and market volatility to remain high due to the delayed impact of monetary tightening, high costs and geopolitical instability.”
Steel demand in China in 2024 is expected to remain at the same level as in 2023, as real estate investment continues to decline, but the corresponding decline in steel demand will be offset by growth in steel demand coming from the infrastructure investment and manufacturing sectors. In 2025, it is expected that China's steel demand will return to a downward trend with a decrease of 1%.
Forecasts for the world excluding China suggest broad-based steel demand growth at a relatively strong 3.5% per year over 2024-25.
India has emerged as the strongest driver of steel demand growth from 2021, and Indian steel demand is expected to continue to grow with an increase of 8% in 2024 and 2025, thanks to continued growth in all steel-using sectors and especially thanks to continued strong growth in infrastructure investment. In 2025, steel demand in India is expected to increase by nearly 70 million tons compared to 2020.
Other emerging regions of the world such as MENA and ASEAN are expected to show rapid growth in steel demand during 2024-2025 after a significant decline during 2022-2023. We recognize that increasing headwinds in the ASEAN region, such as political instability and reduced competitiveness, could lead to lower steel demand growth trends in the future.
The developed sector is also expected to recover by 1.3% in 2024 and 2.7% in 2025, due to expectations of significant final steel demand growth in the EU in 2025 and continued recovery in the US, Japan, and South Korea.
According to worldsteel, the EU (and the UK) remains the region currently facing the biggest challenges. The region and especially the steel-using sectors are being challenged on many fronts – geopolitical change and instability, high inflation, monetary tightening and partial withdrawal of fiscal support, while energy and commodity prices remain high. The persistence of these unfavorable factors has caused the region's steel demand in 2023 to plummet to the lowest level since 2000 and caused the forecast for this year to be adjusted significantly downward. Only after a technical recovery in 2024, the region's steel demand is expected to show a meaningful recovery with 5.3% growth in 2025. The EU steel demand forecast in 2024 is only 1.5 million tons higher than the 2020 pandemic bottom.
In stark contrast to the EU, US steel demand continues to demonstrate healthy steel demand fundamentals. The country's steel demand is expected to quickly return to the growth path in 2024 after falling sharply due to the housing market downturn in 2023 thanks to strong investment activity, boosted by the Inflation Reduction Act and a gradual recovery in housing activity.
Industry trends in steel use
The downturn in residential construction due to high interest rates and high construction costs has dragged down steel demand in most major steel-using regions.
In 2023, we saw sharp declines in housing activity in the US, China, Japan and the EU, and weakness in housing activity is expected to last through 2024 in most major markets due to the lagged effects of monetary tightening. It is expected that a meaningful recovery in the residential construction sector will only begin from 2025 onwards.
A slowdown in global manufacturing activity due to high costs and uncertainties, tight financial conditions and weak global demand also weighed on global steel demand in 2023. Indicators point to global manufacturing activity starting to recover in 2024. Automobiles were the notable exception to the overall weakness in manufacturing, as the sector finally showed a long-awaited strong recovery in 2023 as demand suffered a Suppression and relaxation of supply chain constraints. After a year of strong double-digit growth in all major auto-producing countries, the sector is expected to have the weakest growth in most of them in 2024.
Strong investment in manufacturing facilities and public infrastructure underpinned global steel demand in 2023. Investment in manufacturing facilities was driven by the ambitions of major economies to develop strategic industries and ensure security of supply for strategic components and raw materials amid growing geopolitical tensions. We believe that the green transition of the world economy, which requires economic transformation on an unprecedented scale, is one of the key factors behind the strength of investment in public infrastructure. For example, a recent study by the Economic Commission estimates that global steel demand for new wind power installations will triple by 2030 to about 30 million tons compared to the early 2020s. Although the share of steel demand for wind power installations will remain relatively low in total global demand, it could significantly support overall steel demand in some regions such as Europe.
Public infrastructure investments to shore up infrastructure against rising climate change risks and rebuild disaster-hit areas are key factors supporting steel demand in several major steel-using countries in 2023 (e.g., Japan, China, South Korea, Turkey).
Investment in public infrastructure and manufacturing base is expected to remain strong. However, high construction costs and labor shortages are major constraints for many major economies and this could limit further growth in public infrastructure investment and manufacturing facilities in the short term.
Ha Diem HSV