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WSA: War Will Dampen Steel Demand in 2022

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The World Steel Association forecasts steel demand will grow by 0.4 percent in 2022 and another 2.2 percent in 2023. In 2023, total global steel demand will reach 1.88 billion metric tons, the Brussels-based organization proejcts in its latest Short Range Outlook.

The current forecast is made against the backdrop of the war in Ukraine and is subject to high uncertainty. Inflation and uncertainty also cloud the outlook for steel demand

“This Short Range Outlook is issued in the shadow of the human and economic tragedy following the Russian invasion of Ukraine. We all wish for as rapid and peaceful an end to this war as possible,” said Máximo Vedoya, chairman of the WSA Economics Committee. “In 2021, recovery from the pandemic shock turned out to be stronger than expected in many regions, despite continuing supply chain issues and COVID waves. However, a sharper than anticipated deceleration in China led to lower global steel demand growth in 2021. For 2022 and 2023, the outlook is highly uncertain. The expectation of a continued and stable recovery from the pandemic has been shaken by the war in Ukraine and rising inflation.”

The magnitude of the impact of this conflict will vary across regions, depending on their direct trade and financial exposure to Russia and Ukraine. There is an immediate devastating effect on Ukraine, consequences for Russia, and major impact on the EU due to its reliance on Russian energy and its geographic proximity to the conflict area. The impact will also be felt globally via higher energy and commodity prices – especially raw materials for steel production – and continued supply chain disruptions, which were troubling the global steel industry even before the war. Furthermore, financial market volatility and heightened uncertainty will undermine investment, the forecast claims.

Such global spillovers from the war in Ukraine, along with low growth in China, point to reduced growth expectations for global steel demand in 2022. There are further downside risks from the continued surge in virus infections in some parts of the world, especially China, and rising interest rates. The expected tightening of U.S. monetary policies will hurt financially vulnerable emerging economies.

The outlook for 2023 is highly uncertain. WSA's forecast assumes that the confrontation in Ukraine will come to an end in the course of 2022 but that the sanctions on Russia will largely remain.

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