Steel demand in developed economies to contract by 1.8% in 2023
Steel demand in developed economies is expected to contract by 1.8% in 2023 after falling by 6.4% in 2022, with Europe suffering particularly heavily from monetary tightening and high energy costs. In 2024, a technical rebound will enable growth of 2.8% in steel demand.
European Union (27) and United Kingdom
While the EU economy turned out to be more resilient than expected to the energy crisis brought about by the Russia-Ukraine war, high interest rates and energy costs are putting a heavy toll on manufacturing activities. The recovery of the auto sector continues, though. Despite the continued recovery, auto production is not expected to reach the pre-pandemic level in 2024. Residential construction is also affected by high interest rates, materials costs, and labour shortages, while the momentum in infrastructure investment remains stable. Germany is in a particularly difficult situation, with both a manufacturing recession and a housing crisis. With monetary policy expected to remain tight, a rebound in real demand is not foreseen for 2024, but as destocking cycles end, a technical rebound will enable positive growth in steel demand in 2024.
After a fall of 7.8% in 2022, steel demand is expected to fall by 5.1% in 2023. Growth of 5.8% is expected in 2024.
United States
Despite the resilience of the US economy to steep interest hikes, steel using sectors are feeling the impact. Particularly affected is residential construction, which is expected to contract in 2023 and 2024. However, the commercial building sector is showing robust recovery thanks to reshoring activities. Growth in the infrastructure sector is also being supported by the 2022 Infrastructure Law and Inflation Reduction Act (IRA). Manufacturing has been also slowing, but the automotive sector is expected to continue its post-pandemic recovery. The lagged effect of tight monetary policy points to downside risk for 2024.
After a fall of 2.6% in 2022, steel demand is expected to decline by 1.1% in 2023 and then grow by 1.6% in 2024.
Japan
Labour shortages and rising costs are leading to sluggish growth in construction activities, but manufacturing steel demand is expected to show moderate growth in both 2023 and 2024, helped by the recovery of automotive production (the weak yen or external markets exert a limited influence on steel using sectors as Japan is basically a supply-side constrained economy).
After a fall of 4.2% in 2022, demand is expected to decrease by 2.0% in 2023 and then grow by 0.6% in 2024.
South Korea
Recovery from the flood damages in 2022 and small but positive growth in construction after years of contraction will allow a recovery in steel demand in 2023, but it will be only moderate due to overall weakness in manufacturing, except for automotive.
Following a contraction of 8.5% in 2022, Korea’s steel demand is expected to show growth of 3.3% in 2023 and 1.1% in 2024.
