Worldsteel tempers year-end outlook

The Brussels-based World Steel Association (Worldsteel) is forecasting global steel demand this year will decline by about 0.9 percent to 1.751 billion metric tons.

“After three years of decline, we expect to see a broad-based recovery in the world excluding China in 2025," the group says in its newly released Short Range Outlook. "Global steel demand is forecast to finally rebound by 1.2 percent in 2025 to reach 1.772 billion metric tons.”

Martin Theuringer, Ph.D., of the German Steel Association and chair of the Worldsteel Economics Committee, says the year in progress has been difficult for global steel demand as the global manufacturing sector continued to deal with headwinds such as declining household purchasing power, aggressive monetary tightening and escalating geopolitical uncertainties.

“The ongoing weakness in housing construction, which is driven by tight financing conditions and high costs, has further contributed to the sluggish demand for steel," Theuringer says.

“We are making significant downward revisions to our 2024 steel demand outlook for most major economies, including China, reflecting the persistent weakness in manufacturing alongside lingering global economic headwinds. We now anticipate a notable decline in steel demand in China and most major developed economies in 2024.”

Pointing to one bright spot, Theuringer continues, “In stark contrast, India is expected to maintain its strong momentum, with robust growth in steel demand projected for both 2024 and 2025. Most other major developing economies are expected to witness a rebound in steel demand in 2024, recovering from the slowdown experienced in 2022 and 2023.

“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 outlook for 2025-2026 will be the progress made in the stabilization of China’s real estate sector, effectiveness of interest rate adjustments in spurring private consumption and business investment, and the trajectory of infrastructure spending dedicated to decarbonization and digital transformation across major global economies.”

The association committee points to the ongoing downturn in the Chinese real estate sector as responsible for a predicted 3 percent decline in Chinese steel demand in 2024 and a further 1 percent drop in 2025.

Steel demand in what the association calls the developing world excluding China is projected to grow by 3.5 percent in 2024 and by 4.2 percent next year, according to the committee, driven by India’s robust growth and a rebound in other major emerging economies.

“India has emerged as the strongest driver of steel demand growth since 2021 and this trend is set to continue," Worldsteel says. "We are maintaining our robust growth projections for India, anticipating an 8.0 percent increase in steel demand over 2024 and 2025. This expansion is fueled by growth across all steel-consuming sectors, especially by continued strong growth in infrastructure investments.

“Steel demand in other emerging economies of the world, such as the Middle East and North Africa (MENA) and Association of Southeast Asian Nations (ASEAN) regions, is expected to rebound in 2024 after a significant slowdown over 2022 and 2023.”

In nations with developed economies, including the United States, Japan, South Korea and Germany, steelmakers likely will experience a 2 percent decrease in steel demand in 2024.

However, according to the outlook, “There is optimism for 2025, with a projected growth of 1.9 percent in developed world steel demand. This anticipated recovery is driven by the long-awaited upturn in steel demand in the European Union and modest recoveries in the U.S. and Japan.”

A noticeable problem for steel demand this year the outlook cites is the ongoing reluctance of households and businesses to invest in durable goods.

"High costs, economic uncertainty and tighter financing conditions have created a ‘wait-and-see’ attitude, delaying spending decisions,” the committee says.

“The lingering effects of the past three years of inflation have eroded the purchasing power of many middle- and lower-income families, further dampening demand for manufactured goods."

Those same conditions have hit the global automotive sector.

“After an exceptional year of double-digit growth across major auto-producing nations in 2023, the automotive sector is bracing for a significant slowdown in 2024," Worldsteel says. "Light vehicle production forecasts are being revised downward across the board due to mounting concerns over rising inventories and a deceleration in battery electric vehicle (BEV) sales in key markets.”

In all parts of the world, infrastructure spending has helped prevent the demand drop from being too severe.

“Robust investment in manufacturing facilities and public infrastructure has underpinned global steel demand throughout 2023 and into 2024,” Worldsteel says. “These strategic investments aim to enhance productivity, stimulate job creation, accelerate climate change mitigation efforts and secure a leading position in the industries of the future.”

However, the committee notes, “Escalating construction costs, labor shortages and mounting fiscal debt may pose significant challenges for many major economies, potentially limiting further growth in these investment areas in the near term.

“Despite the current challenges, there are reasons for cautious optimism regarding a potential recovery in global manufacturing in 2025. The resilience of the global economy, easing of financing conditions, pent-up demand and increases in real income seen in major economies such as the eurozone and Japan should support a recovery in private consumption and investments and hence a recovery in global manufacturing activity in 2025.”

Worldsteel represents steel producers, national and regional steel industry associations and steel research institutes in nearly every major steel producing country, with its members representing around 85 percent of global steel production.