Worldsteel slashes demand forecast amid inflation, geopolitical conflict

Worldsteel has revised down its 2023 global steel demand forecast to 1.8% on-year growth, compared to the 2.3% growth projected in April.    High interest rates continue to stifle investment and consumption, while manufacturing continues to slow despite supply chain issues easing.    Uncertainty stems from China’s structural transition phase and rising geopolitical conflicts.

Steel demand is seen reaching 1.81 billion tonnes in 2023.    In 2024, it is projected to rise a further 1.9% to 1.85 billion t. “Considering the delayed effect of the tightening monetary policy, we expect steel demand recovery in 2024 to be slow in the advanced economies,” worldsteel economics committee chairman Máximo Vedoya says in a note seen by Kallanish.    “The performance of emerging economies continues to diverge, with emerging Asia maintaining resilience.”

China’s property market should stabilise in the latter part of the year and China’s steel demand will record slight positive growth thanks to government measures.    “The 2024 outlook for China remains uncertain depending on the policy directions to tackle the current economic difficulties,”

Besides Chinese uncertainty, increasing regional conflicts contributing to rising oil prices and further geo-economic fragmentation are downside risks.

Chinese steel demand in 2023 should record 2% growth, supported by infrastructure investments and stabilisation in the property sector.    For 2024, worldsteel forecasts flat on-year steel demand, if government stimulus provides support.    However, the real estate market and exports will continue to exert negative pressure on steel demand, which could contract without stimulus.

In the EU, monetary policy is expected to remain tight, meaning a rebound in real demand is not foreseen for 2024.    However, as destocking cycles end, a technical rebound will enable positive growth in demand next year.    EU plus UK demand is seen dropping 5.1% this year, compared to the April forecast of a 0.4% decline.    It should rebound 5.8% next year.