In the EU, the recovery in steel demand that started in the second half of 2020 is gathering pace, with all steel-using sectors exhibiting a positive recovery despite continuing waves of infection. There could be more upside potential if President Biden’s infrastructure stimulus programme is enacted, but this would not feed through until late 2022. The recovery in oil prices is supporting a recovery in energy sector investment. The momentum in the construction sector is weakening with the end of a residential construction boom and sluggish non-residential sector activities. Steel demand was aided by the strong performance of the automotive and durable goods sectors, but shortage of some components is undermining this recovery. The level of real GDP exceeded its previous high in the second quarter of this year. In the US, the economy continues its robust recovery, driven by pent-up demand and a vigorous policy response. However, supply chain bottlenecks and the services sector still lagging behind are preventing a more robust recovery.Ī reduction in supply chain bottlenecks, continued pent-up demand and rising business and consumer confidence, will strengthen the recovery momentum in 2022.Īfter falling by -12.7% in 2020, steel demand will increase by 12.2% in 2021 and 4.3% in 2022, reaching its pre-pandemic level. More targeted and localised lockdowns helped to minimise the impact of the latest infection waves on economic activities in 2021. Recent government action to push for a transition away from the real estate-dependent growth model is likely to continue. Some restocking activities might support apparent steel use. No growth in steel demand is expected in 2022, with the real estate sector remaining depressed in line with the government policy stance on rebalancing and environmental protection. As a result, while the January to August apparent steel use still stands at a positive 2.7%, overall steel demand is expected to decline by -1.0% in 2021. Furthermore, the strong manufacturing recovery across the world has reduced the export market.įrom a high base last year and with a continued negative trend in the real estate sector, Chinese steel demand will have negative growth for the rest of 2021. At the same time, infrastructure investment has not picked up in 2021 due to a depletion of investment opportunities and limited local government financing ability. Real estate activity has weakened due to tough government measures on developers’ financing introduced in 2020. The sharp deceleration is partly attributable to occasional factors such as the recent adverse weather and small waves of infections through this summer, however more substantive causes include the slowing momentum in the real estate sector and the government cap on steel production. 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 Chinese economy sustained its strong recovery momentum from 2020 into the early part of 2021. Persistent rising inflation, continued slow vaccination progress in developing countries and further growth deceleration in China all pose risks to this forecast.” China 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. 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. In the emerging economies, especially in Asia, the recovery momentum was interrupted by the resurgence of infections. 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. Strong manufacturing activity bolstered by pent-up demand is the main contributor. Due to this vigorous recovery, global steel demand outside China is expected to return earlier than expected to its pre-pandemic level this year. The current forecast assumes that, with the progress of vaccinations across the world, the spread of variants of the COVID virus will be less damaging and disruptive than seen in previous waves.Ĭommenting on the outlook, Mr Al Remeithi, Chairman of the Worldsteel Economics Committee, 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. In 2022, steel demand will see a further increase of 2.2% to 1,896.4 Mt.
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