Global steel demand will grow by 4.5% in 2021 and reach 1,855.4 Mt after 0.1% growth in 2020, according to the World Steel Association (worldsteel).
In 2022, steel demand will see a further increase of 2.2% to hit 1,896.4 Mt, stated worldsteel in its short-range outlook released by its economic committee, led by its chairman Engineer Saeed Ghumran Al Remeithi, also the Emirates Steel CEO, at its bi-annual meeting in Brussels, Belgium.
The forecast assumes that, with the progress of vaccinations across the world, the spread of variants of the Coronavirus will be less damaging and disruptive than seen in previous waves.
Commenting on the outlook, Al Remeithi said: "2021 has seen a stronger than expected recovery in steel demand, leading to upward revisions in our forecast across the board except for China. Due to this vigorous recovery, global steel demand outside China is expected to return earlier than expected to its pre-pandemic level this year."
"Strong manufacturing activity bolstered by pent-up demand is the main contributor. The 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," he stated.
"In the emerging economies, especially in Asia, the recovery momentum was interrupted by the resurgence of infections," he added.
Al Remeithi said: "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," he added.
According to him, steel demand recovery in the GCC fell short of expectations on the back of reduced construction activity due to fiscal consolidation efforts.
"However, in 2022, with rising oil prices and the pandemic under control, steel demand is expected to rebound more strongly. Egypt's steel demand was negatively affected by the suspension of construction licenses in overcrowded urban areas. However, the government's other mega projects have cushioned the pandemic's impact and have supported recovery in 2021," he added.
There have been marked signs of deceleration in the steel using sector's activity since July, leading to a steel demand contraction of -13.3% in July and then -18.3% in August.
The sharp deceleration is attributable to the slowing momentum in the real estate sector and the government cap on steel production.
Real estate activity has weakened due to tough government measures on developers' financing introduced in 2020. Chinese steel demand will have negative growth for the rest of 2021.
As a result, overall steel demand is expected to decline by -1.0% in 2021. No growth in steel demand is expected in 2022, said the report.
On the US market, the worldsteel outlook said the demand was aided by the strong performance of the American automotive and durable goods sectors.
The momentum in the construction sector is weakening with the end of a residential construction boom and sluggish non-residential sector activities.
The recovery in steel demand in the EU that started in the second half is gathering pace, with all steel-using sectors exhibiting a positive recovery despite continuing waves of infection, stated the report.
On the Indian scenario, the worldsteel outlook said since July, a healthy recovery has resumed for all sectors. As a result, India's steel demand suffered only a minor downward revision and will show a strong recovery in 2021.
India’s steel demand will reclaim the 100 million tonnes mark this year, it added.
According to worldsteel, steel demand in the developing economies excluding China continued to recover 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.
In 2022, as vaccinations progress, conditions in the developed economies are expected to improve.
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