Global steel demand will fall by 2.3pc this year to 1.79 bn t, industry association Worldsteel said today, revising down its April guidance of 0.4pc demand growth.
High interest rates and persistently high inflation led to the revision, along with monetary tightening and market softening in China.
“The expectation of a continued and stable recovery from the pandemic has been shaken by the war in Ukraine and rising inflation,” chairman of the Worldsteel economics committee and steelmaker Ternium’s chief executive, Maximo Vedoya, said.
Interest rate hikes by the US Federal Reserve and the strength of the dollar have increased the risk of a recession in the US and will cause capital outflows from emerging markets, as well as dampening investment and consumer spending in general, Worldsteel said.
Risk is skewed to the downside because of monetary policy, inflation, the impact of Covid-19 on the Chinese economy, and the potential gas supply crisis in Europe.
Chinese demand is likely to fall by 4pc this year, equating to 38mn t, after contracting by 6.6pc in the second quarter, because of repeated lockdowns. Investment in Chinese real estate has slowed to the lowest level in 30 years and all major real estate market indicators are negative, Worldsteel said. The amount of floor space under construction in China has contracted for the first time in modern history.
Infrastructure spending is recovering but it will be hard for steel demand to rebound significantly while spending from the real estate sector is weak. Worldsteel expects Chinese demand to remain flat if lockdown measures are largely removed in the latter part of this year, and if small stimulus measures are introduced.
Global demand will increase by 1pc next year, supported by growth in infrastructure spending, particularly within the transportation and energy sub-sectors, Worldsteel director general Edwin Basson told Argus.
Retrieved from:
https://www.argusmedia.com/en/news/2382017-global-steel-demand-to-drop-23pc-this-year?backToResults=true