14 October 2024 | Brussels, Belgium
Worldsteel today released its latest Short Term (2024-2025) Steel Demand Forecast (SRO). The report shows that global steel demand will fall a further 0.9% this year to 1.751 billion tons. After three consecutive years of decline, global steel demand will rebound by 1.2% to 1.772 billion tonnes in 2025.
Commenting on the forecast, Dr. Martin Theuringer, Chairman of Worldsteel’s Market Research Committee and Managing Director of the German Steel Association, said: “2024 is undoubtedly going to be a tough year in terms of global steel demand, as the global manufacturing sector continues to face multiple dilemmas such as declining household purchasing power, significant monetary tightening and heightened geopolitical uncertainty. In addition, housing construction continues to be weak due to financing difficulties and high costs, further exacerbating the downturn in steel demand.
We have significantly lowered our 2024 steel demand forecast for most major economies, including China, reflecting continued weakness in manufacturing and lingering global economic headwinds. We expect steel demand in China and most major developed economies to decline significantly in 2024. In contrast, India will maintain strong momentum, with its steel demand expected to grow significantly between 2024 and 2025. In 2024, steel demand in most other major developing economies will rebound somewhat, recovering from the slowdown in 2022-2023.
While challenging factors remain, such as the ongoing impact of monetary tightening, rising costs, limited affordability, and geopolitical uncertainty, we are cautiously optimistic that global steel demand will enter a phase of broad-based moderate growth in 2025. The key determinants of the global steel demand forecast over the 2025-2026 period will be the steady development of China’s real estate sector, the effectiveness of interest rate adjustments in stimulating private consumption and business investment, and the trajectory of infrastructure spending in major global economies committed to decarbonization and digital transformation.”
The ongoing downturn in China’s real estate sector will affect China’s steel demand, which is expected to decline by 3.0% in 2024 and further to 1.0% in 2025. We expect the 2025 forecast to be revised upwards. The increasing likelihood of greater government intervention and support for the real economy will likely boost Chinese steel demand in 2025.
Driven by strong growth in India and a rebound in other major emerging economies, steel demand in developing countries (excluding China) will grow by 3.5% and 4.2% in 2024 and 2025, respectively.
Since 2021, India has been the strongest driver of steel demand growth and this trend will continue. We maintain our strong growth forecast for India, where steel demand is expected to grow by 8.0% between 2024 and 2025, driven by continued growth in the all-purpose steel sector, particularly in infrastructure investment.
Following a sharp slowdown from 2022 to 2023, steel demand in the rest of the world’s emerging economies, such as the Middle East and North Africa region and the ASEAN region, is expected to rebound in 2024.
With steel demand in major steel-using economies such as the United States, Japan, South Korea and Germany significantly reduced, steel demand in developed countries is expected to decline by 2.0% in 2024. However, we are optimistic about 2025, with steel demand in developed countries expected to grow by 1.9%. This recovery is dependent on a long-awaited pick-up in steel demand in the EU and modest recoveries in the US and Japan.
Development trend of steel industry
Global manufacturing activity continues to weaken. In our last forecast, our forecast for a sustained recovery in global manufacturing activity in 2024 did not materialize as expected. Instead, the industry experienced a recession in the third quarter, a departure from the positive signals from the initial growth and leading indicators observed in the first few months of the year. We note that one of the important reasons for the slowdown in manufacturing has been the reluctance of households and businesses to invest in durable goods. High costs, economic uncertainty and tighter financing conditions have led to a “wait and see” attitude and delayed spending decisions. The effects of inflation over the past three years have eroded the purchasing power of many low – and middle-income households, further depressing demand for manufactured goods.
Despite the challenges at this stage, there are reasons to be cautiously optimistic about the potential recovery of global manufacturing in 2025. A resilient global economy, relaxed financing conditions, pent-up demand, and rising real incomes in major economies (the euro area and Japan) will support a recovery in private consumption and investment, underpinning a recovery in global manufacturing activity in 2025.
In 2024, the housing construction sector remains weak in most major markets, continuing to weigh on steel demand, especially in key regions such as China, the United States, the European Union, Japan and South Korea. After a period of strong growth driven by historically low interest rates, housing construction activity fell sharply in many major economies in 2023 as central banks sharply raised borrowing costs to combat soaring inflation. This slowdown, which has continued until 2024, has affected the development of the construction sector, thereby reducing steel demand. With the easing of financing conditions, the residential construction sector (EU, US and South Korea) is expected to experience a substantial recovery from 2025.
After significant double-digit growth in the major automotive producing countries in 2023, the automotive industry is set for a significant slowdown in 2024. Light vehicle production forecasts are being cut across the board due to growing concerns about rising inventories and a slowdown in pure electric vehicle sales in key markets. This turnaround is in stark contrast to last year’s strong performance and highlights the sector’s vulnerability to changing market dynamics and potential challenges ahead. We expect global light vehicle production to show moderate growth in 2025.
Strong investment activity in the manufacturing and public infrastructure sectors supported global steel demand in 2024. Investment in these sectors by the world’s major economies continues to grow, continuing the momentum seen since 2023. These strategic investments are designed to increase productivity, create jobs, work to mitigate climate change, and ensure leadership in the industries of the future. Rising construction costs, labor shortages, and mounting fiscal debt are likely to pose significant challenges to many major economies, limiting sustained growth in these investment areas in the near term.
The green transition of the world economy, which requires an economic transition of unprecedented scale and extreme complexity, is one of the main factors behind the strong investment in the public infrastructure sector. By the end of the decade, steel demand for expanding the global grid could double to about 20 million tons per year, a sharp increase from the current rate of 10 million tons per year. We expect that expanding global renewable power generation capacity and connecting it to demand centers will require an additional steel demand of about 40 million tons by the end of the decade, providing fairly significant support to overall steel demand in major developing economies such as China and India, as well as in developed economies such as Europe and North America.
Post time: Oct-16-2024