Global steel demand to return to pre-pandemic levels in 2021, except in China

Global demand for steel is expected to return to pre-Covid-19 levels in 2021 with the exception of China, as resurgent demand continues to fuel strong manufacturing activity, according to a new report from the World Steel Association (worldsteel). The Brussels-based industry group's economic committee, chaired by Saeed Al Remeithi, chief executive of the UAE's Emirates Steel , projects demand to grow 4.5 per cent in 2021 to reach 1,855.4 metric tonnes after a tepid 0.1 per cent growth in 2020, with growth further rising by 2.2 per cent to 1,896.4 metric tonnes in 2022. The forecast takes into account the vaccination programmes around the world, and less-disruptive nature of coronavirus variants compared with previous waves. “Strong manufacturing activity bolstered by pent-up demand is the main contributor. Developed economies have outperformed our 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,” Mr Al Remeithi said. The pandemic upended the global economy, forcing industries engaged in steel, including construction, autos and durable goods, to halt projects or scale down manufacturing as demand dried up. But with restrictions largely lifted and economies reopening, industry stakeholders are making up for lost time and keeping up with rejuvenated demand. Steel demand recovery in the GCC fell short of expectations on the back of reduced construction activity owing to fiscal consolidation efforts. But with rising oil prices and the pandemic under control, steel demand is expected to rebound more strongly in 2022. Demand in China dropped 13.3 per cent in July and 18.3 per cent in August because of the slowing momentum in the real estate sector and the government cap on steel production. Activity also weakened owing to tough government measures on developers' financing that were introduced in 2020. Chinese steel demand will have negative growth for the rest of 2021. In the US, 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 non-residential sector activities. Recovery in the European Union is gathering pace, with all steel-using sectors exhibiting a positive recovery despite continuing waves of infection. Japan's rising exports, investment and consumption have aided steel's recovery, with the manufacturing, automotive and machinery sectors leading the way. South Korea's steel demand is expected to recover to 2019 levels this year, supported by improving exports and investment in manufacturing facilities. In developing economies excluding China, steel demand continued to rebound in 2021, aided by the recovery in commodity prices and international trade. However, new Covid waves combined with low vaccination levels and a slow recovery in international tourism restrained developing economies. India suffered only a minor downward revision and will show a strong recovery in 2021, with steel demand to reclaim the 100-million-tonne mark this year. “While the manufacturing sector’s recovery remained more resilient to the new waves of infection than expected, supply-side constraints led to a levelling 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, we expect steel demand will continue to recover in 2022,” Mr Al Remeithi said.

Global steel demand to return to pre-pandemic levels in 2021, except in China

Recovery in the GCC falls short of expectations on the back of reduced construction activity