Inflation and uncertainty cloud steel demand outlook
Commenting on the outlook, Máximo Vedoya, President of the World Economic Commission, said, “This short-range outlook comes in the shadow of the human and economic tragedy that followed the Ukraine invasion of Ukraine by Russia. Russia. We all want this war to end as quickly and peacefully as possible.
In 2021, the recovery from the pandemic shock turned out to be stronger than expected in many regions, despite the continued supply chain problems and COVID wave. However, a stronger-than-expected deceleration in China has resulted in lower global steel demand growth in 2021. For 2022 and 2023, the outlook is highly uncertain. Expectations for a continued and steady recovery from the pandemic have been shaken by the war in Ukraine and rising inflation.”
The extent of the impact of this conflict will vary between regions, depending on their direct commercial and financial exposure to Russia and Ukraine. There was an immediate devastating effect on Ukraine, a consequential impact on Russia, and a major impact on the EU due to Russia's energy dependence and proximity to the conflict zone.
The outlook for 2023 is highly uncertain. Our forecast assumes that the confrontation in Ukraine will end in 2022 but sanctions against Russia will largely remain.
In addition, the geopolitical situation surrounding Ukraine poses significant long-term implications for the global steel industry. Among them are the potential for a realignment of global trade flows, a shift in energy trade and its impact on the energy transition, and the continued reconfiguration of global supply chains. .
China
China's steel demand plummets in 2021 due to tough government measures against property developers. Steel demand in 2022 will not change due to the government's efforts to boost infrastructure investment and stabilize the real estate market. Stimulus measures introduced in 2022 are likely to support small positive steel demand growth in 2023. There is upside potential from more substantial stimulus measures, which could happen. if the economy faces more challenges from the deteriorating external environment.
Advanced Economies
Despite the sporadic wave of COVID infections and supply chain constraints in the manufacturing sector, steel demand recovers strongly in 2021, especially in the EU and US. However, the outlook for 2022 has softened due to inflationary pressures, which is further reinforced by events surrounding Ukraine. The impact of the war will be especially pronounced in the EU, which is heavily dependent on Russian energy and refugee flows. Steel demand in developed countries is forecast to grow by 1.1% and 2.4% in 2022 and 2023, respectively, after recovering 16.5% in 2021.
Developing economies excluding China
In developing economies, the post-pandemic recovery faces more challenges with the continued impact of the pandemic and rising inflation, which has fueled monetary tightening cycles in many parts of the world. emerging economy. After falling 7.7% in 2020, steel demand in developing countries excluding China has grown by 10.7% in 2021, slightly lower than our previous forecast. In 2022 and 2023, emerging economies excluding China will continue to face challenges from the worsening external environment, the Russia-Ukraine war, and the tightening of the US currency, leading to to low growth of 0.5% in 2022 and 4.5% in 2023.
Areas of use of steel
Global construction activity continued to recover from the shutdowns to post record growth of 3.4% despite a slowdown in China in 2021. The recovery was fueled by an infrastructure boost. construction as part of recovery programs in many countries, and these and investments related to the energy transition will have the potential to drive the growth of the construction sector in coming years. However, the construction sector faces some difficulties due to rising costs and interest rates.
The global auto industry's recovery in 2021 has been disappointing given supply chain bottlenecks that captured the recovery momentum in the second half of the year. The war in Ukraine is likely to delay any return to normalcy for supply chain problems, especially in Europe. Despite the decline in global auto production, the electric vehicle segment is still growing exponentially during the pandemic. Global electric vehicle sales in 2021 will reach 6.6 million units, nearly double that of 2020. The share of electric vehicles in total car sales will increase from 2.49% in 2019 to 8.57% in 2021.
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