Worldsteel forecasts 5.8% steel demand growth in 2021 and 2.7% growth in 2022

15th April 2021

By: Schalk Burger

Creamer Media Senior Deputy Editor

     

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Industry body the World Steel Association (worldsteel), in its 'Short Range Outlook for 2021 and 2022', forecasts that steel demand will grow by 5.8% to 1.87-billion tonnes this year.

In 2022, steel demand will grow by a further 2.7% to reach 1.92-billion tonnes.

“Despite the disastrous impact of the pandemic on lives and livelihoods, the global steel industry was fortunate enough to end 2020 with only a minor contraction in steel demand. This was owing to a surprisingly robust recovery in China, with growth of 9.1%. In the rest of the world steel demand contracted by 10%,” says worldsteel economics committee chairperson Al Remeithi.

“In the coming years, steel demand will recover firmly in developed and developing economies, supported by pent-up demand and governments’ recovery programmes. However, for most developed economies, a return to the pre-pandemic levels of steel demand will take a few years.”

The forecast assumes that the ongoing second or third waves of infections will stabilise in the second quarter and that steady progress on vaccinations will be made, allowing a gradual return to normality in major steel-using countries.

While it is hoped that the worst of the pandemic is passing, there is still considerable uncertainty for the rest of this year.

The evolution of the virus and progress of vaccinations, withdrawal of supportive fiscal and monetary policies, geopolitics and trade tensions could all affect the recovery envisaged in this forecast, he notes.

“For the future, structural changes in a post-pandemic world will bring about shifts in steel demand shape. The steel industry will see exciting opportunities from rapid developments through digitisation and automation, infrastructure initiatives, reorganisation of urban centres and energy transformation. All at the same time as the industry is responding to the need to produce low-carbon steel,” says Remeithi.

After the free-fall in economic activity in advanced economies in the second quarter of 2020, industry generally rebounded quickly in the third quarter, largely owing to the substantial fiscal stimulus measures and unleashing of pent-up demand.

However, activity levels still remained below the pre-pandemic level at the end of 2020. As a result, the developed world's steel demand recorded a double-digit decline of 12.7% in 2020.

“We will see substantial recovery in 2021 and 2022, with growth of 8.2% and 4.2%, respectively. However, steel demand in 2022 will still fall short of 2019 levels,” he points out.

Meanwhile, the European Union's (EU's) steel-using sectors experienced a stronger than expected post-lockdown rebound in manufacturing activities owing to supportive government measures and pent-up demand.

“The recovery in 2021 and 2022 is expected to be healthy, driven by recovery in all steel-using sectors, especially the automotive sector, and public construction initiatives. So far, the EU's recovery momentum has not been derailed by the ongoing third waves, but it remains fragile.”

Generally speaking, developing economies, excluding China, suffered more from the pandemic relative to developed economies, with inadequate medical capacity, a collapse in tourism and commodity prices, and insufficient fiscal support.

Steel demand in the developing economies, excluding China, declined by 7.8% in 2020.

However, within the emerging economies, the picture was varied. India, the Middle East and North Africa and most Latin American countries suffered the most.

Benefitting from the global economic recovery and with renewed government infrastructure initiatives, steel demand in the developing economies is expected to show a relatively quick rebound in 2021 and 2022, with growth of 10.2% and 5.2%, respectively.

Accumulation of debts, no recovery in international tourism and slow vaccination will prevent a faster recovery.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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