Worldsteel's Short Range Outlook for Steel in 2024 and 2025

The World Steel Association (worldsteel) has released its Short Range Outlook (SRO) steel demand forecast for 2024 and 2025. It is projected that this year the demand will rebound by 1.7% to reach 1,793 Mt, and in 2025, the steel demand is expected to grow by 1.2% to reach 1,815 Mt.

Dr. Martin Theuringer, Chairman of the worldsteel Economics Committee, commented on the outlook, stating that "Following two years of negative growth and severe market volatility since the COVID-19 crisis in 2020, we have observed early signs indicating that the global steel demand is entering a growth trajectory in 2024 and 2025"1. Despite the fact that the global economy is confronted with multiple challenges, including the lingering impact of the pandemic, Russia's invasion of Ukraine, high inflation, high costs, falling household purchasing power, rising geopolitical uncertainties, and forceful monetary tightening, it has shown resilience1. As the current monetary tightening cycle approaches its end, it has been noticed that tighter credit conditions and higher costs have led to a significant slowdown in housing activity across most major markets and have also affected the manufacturing sector worldwide. Although it appears that the world economy will experience a soft landing from this monetary tightening cycle, it is anticipated that the growth of global steel demand will remain weak and market volatility will remain high due to the lagged impact of monetary tightening, high costs, and high geopolitical uncertainties.

Regarding China, the World Steel Association anticipates that the steel demand in 2024 will remain at a level similar to that of 2023. The decline in real estate investments will be offset by the growth in steel demand from infrastructure investments and the manufacturing sector. However, in 2025, worldsteel predicts a 1% decline in China's steel demand, suggesting that by 2025, China's steel demand will be significantly lower than the peak demand year of 2020. This projection is in line with the view that China may have reached its peak steel demand and is likely to experience a continued decline in the medium term as the country gradually shifts away from an economic development model reliant on real estate and infrastructure investment1. For 2023, the apparent steel use (ASU) estimate for China, based on official statistics, shows a 3.3% drop, which represents a downward revision of approximately 5 percentage points from the previous forecast made in October 2023. Although the actual steel demand in China's major steel-using sectors in the fourth quarter of last year was better than the estimated ASU, it was still weaker than what worldsteel had expected in October 2023.

Excluding China, worldsteel projects a broad-based growth in steel demand at a relatively strong annual rate of 3.5% over 2024-2025. India has emerged as the most significant driver of steel demand growth since 2021, and it is projected that its steel demand will continue to grow at an 8% rate over 2024 and 2025, driven by the continuous growth in all steel-using sectors, especially the strong growth in infrastructure investments. By 2025, India's steel demand is expected to be nearly 70 million tonnes higher than in 2020. In other emerging regions such as the Middle East and North Africa (MENA) and the Association of Southeast Asian Nations (ASEAN), after a significant slowdown in 2022-2023, their steel demand is expected to show accelerating growth over 2024-2025. However, worldsteel also notes that difficulties in the ASEAN region, such as political instability and erosion of competitiveness, may lead to a lower trend in steel demand growth in the future. In the developed world, a strengthening recovery is expected, with a 1.3% growth in 2024 and 2.7% growth in 2025. It is anticipated that the EU will finally experience a meaningful pick-up in steel demand in 2025, while the US, Japan, and Korea will continue to show resilience.

The EU (and the UK) currently faces the most significant challenges. The region and its steel-using sectors are confronted with multiple difficulties, including geopolitical shifts and uncertainty, high inflation, monetary tightening, partial withdrawal of fiscal support, and still high energy and commodity prices. These negative factors have led to a major drop in the region's steel demand in 2023 to the lowest level since 2000 and have also resulted in substantial downward revisions of the forecast for this year. After only a technical rebound in 2024, the region's steel demand is expected to show a meaningful recovery with a 5.3% growth in 2025. The forecasted steel demand for the EU in 2024 is only 1.5 Mt higher than the pandemic trough in 2020. In contrast, the US steel demand continues to exhibit healthy fundamentals. Thanks to strong investment activity, which has received a boost from the Inflation Reduction Act and a gradual recovery in housing activity, the country's steel demand is expected to quickly return to the growth path in 2024 after a sharp drop led by the housing market slowdown in 2023.