Global steel demand will return to pre-pandemic levels in 2021, except in China
Global demand for steel is expected to return to pre-Covid-19 levels in 2021, with the exception of China, as resurgent demand continues to fuel strong manufacturing activity, according to a new report from the World Steel Association ( worldsteel).
The Brussels-based industrial group’s economic committee, chaired by Saeed Al Remeithi, managing director of Emirates Steel of the United Arab Emirates, forecasts demand growth of 4.5% in 2021 to reach 1,855.4 metric tonnes after a tepid growth of 0.1% in 2020, with further growth increasing by 2.2% to reach 1,896.4 metric tonnes in 2022. Projections take into account vaccination programs around the world and the less disruptive nature of the variants of coronavirus compared to previous waves.
âStrong manufacturing activity supported by pent-up demand is the main contributor. Developed economies have surpassed our earlier expectations by a larger margin than developing economies, reflecting the positive benefit of higher vaccination rates and government support measures. In emerging economies, particularly in Asia, the recovery momentum has been interrupted by the resurgence of infections, âsaid Mr. Al Remeithi.
The pandemic has shaken the global economy, forcing industries engaged in steel, including construction, automobiles and durable goods, to halt projects or cut manufacturing as demand dries up. But with restrictions largely lifted and economies reopening, industry players are making up for lost time and keeping up with rejuvenated demand.
The recovery in steel demand in the GCC fell short of expectations due to reduced construction activity due to fiscal consolidation efforts. But with rising oil prices and the pandemic under control, demand for steel is expected to rebound more strongly in 2022.
Demand in China fell 13.3% in July and 18.3% in August due to the slowdown in the real estate sector and the government cap on steel production. Activity has also weakened due to strict government measures on developer funding that were introduced in 2020. Chinese steel demand will experience negative growth for the remainder of 2021.
In the United States, demand was supported by the good performance of the automotive and durable goods sectors, but shortages of certain components are hampering this recovery. The dynamics of the construction sector are faltering with the end of a residential construction boom and the sluggishness of activities in the non-residential sector. The recovery in the European Union is accelerating, with all steel-using sectors showing a positive recovery despite continued waves of infection.
Japan’s increased exports, investment and consumption have helped steel recover, with the manufacturing, auto and machinery sectors leading the way. South Korea’s steel demand is expected to return to 2019 levels this year, supported by improved exports and investment in manufacturing facilities.
In developing economies outside China, demand for steel continued to rebound in 2021, aided by the recovery in commodity prices and international trade. However, new waves of Covid combined with low levels of vaccination and a slow recovery in international tourism have constrained developing economies. India has only undergone a minor downward revision and will show a strong recovery in 2021, with demand for steel reaching 100 million tonnes this year.
âWhile the recovery in the manufacturing sector has remained more resilient than expected to new waves of infection, supply side constraints have stabilized the recovery in the second half of the year and are preventing a stronger recovery in 2021. But with A high backlog of orders combined with restocking and further progress in vaccinations in developing countries, we expect steel demand to continue to recover in 2022, âsaid Mr. Al Remeithi.
Update: October 16, 2021 4:00 a.m.