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But while global steel demand may benefit next year from some improvement in the performance of China’s construction sector, its struggling end-use industry is forecast to continue to weigh on domestic demand in the world’s biggest steel-producing nation into 2025.
Worldsteel forecasts that global steel demand will fall by 0.9% in 2024 to 1,751 million tonnes, from the 1,892 million tonnes produced in 2023, according to its Short Range Outlook (SRO) for 2024 and 2025, published on October 14.
After three consecutive years of decline, the association has had to make significant further downward revisions.
“2024 has been a difficult year for global steel demand with the global manufacturing sector continuing to grapple with persistent headwinds, such as declining household purchasing power, aggressive monetary tightening, and escalating geopolitical uncertainties,” Dr Martin Theuringer, managing director of the German Steel Association and chair of the Worldsteel economics committee, said.
He added that the “continuing weakness in housing construction” that was “driven by tight financing conditions and high costs, has further contributed to the sluggish demand for steel.”
China’s floundering property and infrastructure sectors will continue to be a major factor in domestic steel appetite, Worldsteel says, driving it down by 3% in 2024 and by an additional 1% in 2025.
But the association does indicate “a growing possibility of more substantial government intervention and support for the real economy, which could bolster Chinese steel demand in 2025.”
China’s government has, however, unleashed a number of stimulus policies to support its property market and to encourage infrastructure investment during the year, but market sources say that such announcements have had little effect beyond sentiment.
Sales among the top 100 property developers in the country fell by 22.1% year on year in August, according to a local industry research institute, and China’s Ministry of Finance (MOF) has urged local governments to restrict local bond issuance for infrastructure project funding to reduce the risk of debt.
The reduction in domestic demand for steel in China has in turn led to the flooding of cheap Chinese steel imports into regions such as Europe and other countries in Asia.
This has resulted in rising international trade protection measures and probes against Chinese steel and downstream products, which could further limit demand for Chinese steel internationally.
Worldsteel expects moderate growth in global steel demand in 2025 due to potentially effective interest rate adjustments and infrastructure spending on decarbonization and digital infrastructure projects across major economies.
But while most major developed economies, as well as China, are expected to see a “notable decline” in steel demand, India is expected to keep up its “strong momentum” in both 2024 and 2025.
In addition, most other major developing economies, including those in the Middle East-North Africa (MENA) and Association of South East Asian Nations (ASEAN) regions, are forecast to experience a rebound in 2024.
Worldsteel says that India has been the “strongest driver of [global] steel demand growth for the past three years,” with steel demand in the country expected to rise by 8% over this year and in 2025.
All steel-consuming sectors are driving the growth in India, in particular infrastructure investment, the association says.
The south Asian country is the world’s second-largest producer of steel, and is targeting 300 million tonnes per year of steel production capacity by 2030.
The country’s strong steel industry is thriving amid weak demand elsewhere, due to an abundance of raw materials such as iron ore, cost-effective labor, strong domestic demand, government support including a National Steel Policy (NSP) project, and healthy economic growth.
Domestic demand for steel in India is also expected to expand, with its per-capita steel consumption still much lower than China’s, Fastmarkets understands.
Worldsteel forecasts that developing countries will see a 2.0% drop in steel demand this year, with declines expected in major steel-using economies such as the US, Japan and Korea.
The association, however, projects growth of 1.9% in the developed world in 2025, due in large part to the “long-awaited upturn in steel demand in the EU” and “modest recoveries” in Japan and the US.
Worldsteel also spoke of cautious optimism for a potential uptick in global manufacturing activity in 2025 due to a resilient global economy, easing financial conditions, “pent-up demand and increases in real income in major economies such as the eurozone and Japan.”
But previous forecasts of a further recovery in 2024 did not materialize and the sector saw activity fall in this year’s third quarter, despite the growth earlier in the year, and leading indicators initially giving positive signals.
As in China, housing construction activity has been dragging down steel demand in the US, the EU, Japan and South Korea, Worldsteel says.
But it forecasts a “meaningful recovery in residential construction in the EU, US and Korea from early 2025 onward due to the “easing of financial conditions.”
The association forecasts that the automotive sector will face a “significant slowdown” in 2024 after a strong year of double-digit growth, with projections for light vehicle production falling due to concerns over mounting inventories and diminishing sales of battery electric vehicles (BEVs) in major markets.
Demand for new EVs in Europe has remained sluggish in the year, with sales of fully electric cars falling by 43.9% year on year in August, according to the European Automobile Manufacturers’ Association (ACEA).
Leading German carmaker Volkswagen has even said that it may close some of its German factories, claiming that the transition to electric vehicles has been “brutal” for Europe’s car industry.
At the end of October, the EU will vote on whether to impose import tariffs of 17-38% on EVs from China, in addition to an existing 10% tariff, after the US put a 100% tariff on EVs imported from China.
But the green transition more generally has been driving the strength in public infrastructure investment, Worldsteel says, with steel demand for expanding global electricity grids expected to double over the next few years to 20 million tonnes per year.
“We estimate that expanding global renewable energy generation capacity, and connecting it to demand centers, will necessitate a steel demand increase of approximately 40 million tonnes by the end of the decade,” the association added.
“This is likely to give quite noticeable support to overall steel demand both in major developing economies such as China and India, and in developed economies, especially Europe and North America.”
But Worldsteel notes that rising construction costs, labor scarcity, and a mountain of fiscal debt may create “significant challenges to many major economies, potentially limiting further growth in these investments in the near term.”
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