The Brussels-based World Steel Association (Worldsteel) has released its short-range outlook for 2021 and 2022. Worldsteel forecasts steel demand will grow by 5.8 percent in 2021 to reach nearly 1.88 billion metric tons.
Steel output declined by 0.2 percent in 2020. In 2022, steel demand will experience additional growth of 2.7 percent to reach nearly 1.925 billion metric tons.
The current forecast, Worldsteel says, assumes “the ongoing second or third waves of [COVID-19] infections will stabilize in the second quarter and that steady progress on vaccinations will be made, allowing a gradual return to normality in major steel-using countries.”
“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,” remarks Saeed Ghumran Al Remeithi, chair of the Worldsteel Economics Committee.
The committee says there is still “considerable uncertainty for the rest of 2021,” saying the evolution of the virus and progress of vaccinations, withdrawal of supportive fiscal and monetary policies, geopolitics and trade tensions all could affect the recovery outlined in its forecast.
In developed nations, “After the free-fall in economic activity in the second quarter of 2020, industry generally rebounded quickly in the third quarter, largely due to the substantial fiscal stimulus measures and unleashing of pent-up demand,” writes Worldsteel.
The association notes, however, that activity levels remained below the pre-pandemic level at the end of 2020. As a result, the developed world’s steel demand recorded a decline of 12.7 percent in 2020.
Predicts Worldsteel, “We will see substantial recovery in 2021 and 2022, with growth of 8.2 percent and 4.2 percent, respectively. However, steel demand in 2022 will still fall short of 2019 levels.”
Despite high infection levels, the United States economy was able to rebound strongly from the first wave thanks in part to substantial fiscal stimulus that supported consumption. This helped durable goods manufacturing, but overall U.S. steel demand fell by 18 percent in 2020.
The Biden administration has announced a $2 trillion fiscal proposal containing provisions for substantial infrastructure investment over a multiyear period. The plan will be subject to negotiations in Congress.
Almost any resulting plan will have upside potential for steel demand. However, despite this and fast progress in vaccinations, steel demand recovery will be constrained in the short term by a weak rebound in the non-residential construction and energy sectors. The automotive sector is expected to recover strongly.
In the European Union, steel-consuming sectors suffered severely from the first lockdown measures in 2020 but experienced a stronger than expected postlockdown rebound in manufacturing activities due to supportive government measures and pent-up demand, says Worldsteel.
Accordingly, steel demand in 2020 in the EU 27 nations and the United Kingdom ended with a better-than-expected 11.4 percent contraction.
“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,” Worldsteel says. So far, the EU’s recovery momentum has not been derailed by ongoing COVID-19 surges, but the continent’s health situation “remains fragile,” the association adds.
Scrap-importing electric arc furnace (EAF) mill-heavy Turkey “suffered a deep contraction in 2019 due to the currency crisis of 2018, [but] maintained the recovery momentum that started in late 2019 due to construction activities,” Worldsteel says. The recovery momentum there will continue, and steel demand is expected to return to the precurrency crisis level in 2022, says the group.
The economy of South Korea, another scrap importing nation, escaped a large decline in gross domestic product thanks to better management of the pandemic, and it saw positive momentum in facility investment and construction.
Nevertheless, steel demand contracted by 8 percent in 2020 because of contraction in the auto and shipbuilding sectors. In 2021-22, these two sectors will lead the recovery, which will be further supported by the continued strength in facility investment and government infrastructure programs. Nevertheless, steel demand in 2022 is not expected to return to the pre-pandemic level.
India suffered severely from an extended period of severe lockdown, which brought most industrial and construction activities to a standstill. However, the economy has been recovering strongly since August, (much sharper than expected, says Worldsteel), with the resumption of government projects and pent-up consumption demand.
India’s steel demand fell by 13.7 percent in 2020 but is expected to rebound by 19.8 percent to exceed the 2019 level in 2021, likely providing good news for ferrous scrap exporters. The growth-oriented government agenda will drive India’s steel demand up, while private investment will take longer to recover.
The Japanese economy also was dealt a severe blow from the pandemic because of the interruption of broad economic activity and weak confidence that added to the effect of an October 2019 consumption tax hike. With a particularly pronounced fall in auto production, steel demand declined by 16.8 percent in 2020. The recovery in Japan’s steel demand will be moderate, driven by a rebound in the automotive sector with recovering exports and industrial machinery because of a worldwide recovery in capital spending, according to Worldsteel.
In the Association of Southeast Asian Nations (ASEAN) region, disruptions to construction projects hit the fast-growing steel market, and steel demand contracted by 11.9 percent in 2020.
Malaysia (which imports significant amounts of scrap from the U.S.) and the Philippines were the most severely hit, while Vietnam and Indonesia saw only a modest decline in steel demand. Recovery will be driven by a gradual resumption of construction activities and tourism, which will accelerate in 2022.
In China, the construction sector had a fast recovery from April 2020 onward, supported by infrastructure investment. For 2021 and onward, real estate investment growth may decrease in light of the government’s guidance to slow down growth in that sector.
Investment in infrastructure projects in 2020 reported tempered growth of 0.9 percent. However, as the Chinese government has kicked off a number of new projects to support the economy, the growth in infrastructure investment is expected to pick up in 2021 and continue to affect steel demand in 2022.
In the manufacturing sector, automotive production has been recovering strongly since May 2020. For all of 2020, auto production declined by only 1.4 percent. Other manufacturing sectors have shown growth because of strong export demand.
Overall in China, apparent steel use rose by 9.1 percent in 2020. In 2021, it is expected stimulus measures introduced in 2020 will largely remain in place to ensure continued reasonable growth in the economy. As a result, most steel-consuming sectors will show moderateThe Brussels-based World Steel Association (Worldsteel) has released its short-range outlook for 2021 and 2022. Worldsteel forecasts steel demand will grow by 5.8 percent in 2021 to reach nearly 1.88 billion metric tons.
Steel output declined by 0.2 percent in 2020. In 2022, steel demand will experience additional growth of 2.7 percent to reach nearly 1.925 billion metric tons.
The current forecast, Worldsteel says, assumes “the ongoing second or third waves of [COVID-19] infections will stabilize in the second quarter and that steady progress on vaccinations will be made, allowing a gradual return to normality in major steel-using countries.”
“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,” remarks Saeed Ghumran Al Remeithi, chair of the Worldsteel Economics Committee.
The committee says there is still “considerable uncertainty for the rest of 2021,” saying the evolution of the virus and progress of vaccinations, withdrawal of supportive fiscal and monetary policies, geopolitics and trade tensions all could affect the recovery outlined in its forecast.
In developed nations, “After the free-fall in economic activity in the second quarter of 2020, industry generally rebounded quickly in the third quarter, largely due to the substantial fiscal stimulus measures and unleashing of pent-up demand,” writes Worldsteel.
The association notes, however, that activity levels remained below the pre-pandemic level at the end of 2020. As a result, the developed world’s steel demand recorded a decline of 12.7 percent in 2020.
Predicts Worldsteel, “We will see substantial recovery in 2021 and 2022, with growth of 8.2 percent and 4.2 percent, respectively. However, steel demand in 2022 will still fall short of 2019 levels.”
government has kicked off a number of new projects to support the economy, the growth in infrastructure investment is expected to pick up in 2021 and continue to affect steel demand in 2022.
In the manufacturing sector, automotive production has been recovering strongly since May 2020. For all of 2020, auto production declined by only 1.4 percent. Other manufacturing sectors have shown growth because of strong export demand.
Overall in China, apparent steel use rose by 9.1 percent in 2020. In 2021, it is expected stimulus measures introduced in 2020 will largely remain in place to ensure continued reasonable growth in the economy. As a result, most steel-consuming sectors will show moderate growth and China’s steel demand is expected to grow by 3 percent in 2021. In 2022, steel demand growth will “decelerate to percent as the effect of the 2020 stimulus subsides, and the government focuses on more sustainable growth,” according to Worldsteel.
growth and China’s steel demand is expected to grow by 3 percent in 2021. In 2022, steel demand growth will “decelerate to percent as the effect of the 2020 stimulus subsides, and the government focuses on more sustainable growth,” according to Worldsteel.
Post time: Sep-28-2021