What does the end of 2022 look like for the steel market

What does the end of 2022 look like for the steel market? There are indications that the global steel sector will not fully recover in 2023.

We expect significantly lower earnings for steel producers. The global economic slowdown has ended the period of exceptionally high prices supported by pent-up demand after the pandemic.

China and India are the first two steel producing countries in the world. They produce 1,032.8 and 118.2 million tons of crude steel per year, respectively.

While China is currently the largest steel producing nation, its domestic demand for steel is expected to decline in the coming years.

On the other hand, India‘s steel manufacturing industry is expected to double by 2030. And it will almost quadruple by 2050 compared to 2019 production levels. This can be attributed to the importance of steel in infrastructure, housing and other crucial sectors for India’s development. Thus, India’s involvement in any global steel decarbonization arrangement will be essential.

Steel markets will normalize in 2023, with volumes similar to 2021 levels, excluding China.

It is expected that global steel consumption will decrease by 60-65 million tons in 2022. The reduction in steel production targeted by China will represent 20-30 million tons of this decrease.

However, an incremental increase in steel consumption is expected in 2023 in markets such as India, Southeast Asia and the USA.

THE END OF THE YEAR 2022 FOR THE STEEL MARKET IN EUROPE

The outlook for steel companies remains bleak in Europe. The causes of these prospects are: the high and volatile costs of energy, the looming recession, the decline in consumer confidence and the greater need to redesign supply chains for the steel sector and, eventually, its end markets.

It is expected that the winter months will be particularly hard both for the industry and for the economy in general. A recession is expected between the 4th quarter of 2022 and the 2nd quarter of 2023.

However, in some markets, including North America, India, Turkey and Brazil, sentiment remains more positive. These regions benefit from protectionist trade measures, government support for infrastructure spending and cost advantages in some markets.

Geopolitics plays an important role in the evolution of the steel market.

Additional pressures on trade from the war in Ukraine and the resulting sanctions on Russia, the US-China trade relationship or a potential escalation of China-Taiwan tensions and evolving protectionist measures in major economies could change the market.