The World Steel Association forecasts steel demand will grow an additional 2.2 percent in 2022 to 1.9 billion tons. This follows a 4.5 percent growth in demand in 2021, the Brussels-based group projects.
In 2020, global steel demand was nearly flat, growing just 0.1 percent.
The 2022 forecast assumes the progress of vaccinations across the globe will continue and the spread of COVID variants will be less damaging than seen in previous waves.
“2021 has seen a stronger than expected recovery in steel demand, leading to upward revisions in our forecast across the board except for China. Due to this vigorous recovery, global steel demand outside China is expected to return earlier than expected to its pre-pandemic level this year,” said Al Remeithi, chairman of the WSA’s economics committee.
Strong manufacturing activity bolstered by pent-up demand is the main contributor. The developed economies have outperformed WSA’s earlier expectations by a larger margin than the developing economies, reflecting the positive benefit of higher vaccination rates and government support measures. In the emerging economies, especially in Asia, the recovery momentum was interrupted by the resurgence of infections, WSA claims.
While the manufacturing sector’s recovery remained more resilient to the new waves of infection than expected, supply-side constraints led to a leveling off of the recovery in the second half of the year and are preventing a stronger recovery in 2021. But with high backlog orders combined with a rebuilding of inventories and further progress in vaccinations in developing countries, WSA’s expect steel demand will continue to recover in 2022.
In the U.S., WSA noted the economy continued its robust recovery, driven by pent-up demand and a vigorous policy response. The level of real GDP exceeded its previous high in the second quarter of this year.
Steel demand was aided by the strong performance of the automotive and durable goods sectors, but shortage of some components is undermining this recovery. The momentum in the construction sector is weakening with the end of a residential construction boom and sluggish nonresidential sector activities. The recovery in oil prices is supporting a recovery in energy sector investment.
In contrast, in China, there have been marked signs of deceleration in the steel using sector's activity since July, leading to a steel demand contraction of 13.3 percent in July and then 18.3 percent in August. The sharp deceleration is partly attributable to occasional factors such as the recent adverse weather and small waves of infections through this summer, however more substantive causes include the slowing momentum in the real estate sector and the government cap on steel production.
From a high base last year and with a continued negative trend in the real estate sector, Chinese steel demand will have negative growth for the rest of 2021. As a result, while the January to August apparent steel use still stands at a positive 2.7 percent, overall steel demand is expected to decline by 1 percent in 2021, with no growth in demand next year.