Prospects for steel demand in 2022

The World Steel Association estimates a steel demand in 2022 contracted by 2.3%. It will reach 1,796.7 Mt. after having grown by 2.8% in 2021.

„The global economy is affected by persistent inflation, the monetary tightening of the USA, the economic deceleration of China and the consequences of the invasion of Ukraine by Russia. High energy prices, rising interest rates and declining confidence have led to a slowdown in the activities of sectors that use steel. As a result, our current forecast for global steel demand growth has been revised downward compared to the previous one.

The outlook for 2023 depends on the impact of the tightening of monetary policies and the ability of central banks to anchor inflationary expectations. In particular, the EU’s prospects are subject to additional downside risk due to high inflation and the energy crisis that have been exacerbated by the Russia-Ukraine war.” – Máximo Vedoya, president of the Worldsteel Economic Committee.

REQUEST FOR STEEL IN 2022 – THE GENERAL CONTEXT

The Russia-Ukraine war exacerbated the inflationary pressure that was ignited by the imbalances between demand and supply. It disrupted energy and food supplies and intervened in supply chains. Especially in Europe, where dependence on Russian gas supply is high, economic activities are strongly affected by the energy crisis.

The increase in interest rates and high inflation will affect investments and consumer spending. They will also affect the sectors with intense consumption of steel, such as: constructions, cars and durable goods.

Supply chain problems eased somewhat in 2022. But they continued to restrict production activities as new disruptions occurred.

Assuming the war doesn’t end soon and China continues to maintain its strict COVID containment policy, supply bottlenecks won’t completely dissipate, despite the slowdown in demand.

Uncertainty remains high for the global economy, and the balance of risks is mostly tilted downward.

THE SITUATION OF STEEL IN EUROPE

It is expected that the demand for steel in the EU will contract by 3.5% in 2022. As an immediate improvement in the gas supply situation is not in sight, the demand for steel in the EU will continue to contract in 2023. A significant risk, in plus, of decrease in the case of severe winter weather or other interruptions of the energy supply.

Financial risks stemming from high public debt and slow growth in China pose additional downside risks for the EU. There are also possible long-term consequences for the structure of the economy. And, therefore, the demand for steel will be affected, if the economic constraints continue at the current level. On the other hand, if the Russia-Ukraine war ends earlier than expected, there is a positive potential.