On April 14, 2022, the World Steel Association (WSA) released the latest version of the short-term (2022-2023) steel demand forecast report. According to the report, global steel demand will continue to grow by 0.4 percent to 1.8402 billion tons in 2022, after growing by 2.7 percent in 2021. In 2023, global steel demand will continue to grow by 2.2 per cent to 1.881.4 billion tonnes. In the context of russia-Ukraine conflict, the current prediction results are highly uncertain.
Forecasts for steel demand are clouded by inflation and uncertainty
Commenting on the forecast, Maximo Vedoya, Chairman of the World Steel Association’s Market Research Committee, said: “When we publish this short-term steel demand forecast, Ukraine is in the midst of a human and economic disaster following the Russian military campaign. All of us want an early end to this war and an early peace. In 2021, the recovery was stronger than expected in many regions under the impact of the pandemic, despite supply chain crises and multiple rounds of COVID-19. However, an unexpected slowdown in China’s economy has reduced global steel demand growth in 2021. Steel demand in 2022 and 2023 is highly uncertain. “Our expectations for a sustained and stable recovery have been shaken by the outbreak of war in Ukraine and high inflation.”
Predicted background
The impact of the conflict will vary by region, depending on its direct trade and financial exposure to Russia and Ukraine. The immediate and devastating impact of the conflict on Ukraine has been shared by Russia, and the European Union has also been significantly affected by its dependence on Russian energy and its geographical proximity to the conflict zone. Not only that, but the impact was felt around the world because of higher energy and commodity prices, especially for the raw materials needed to make steel, and the continuing disruption of supply chains that had plagued the global steel industry even before the war began. In addition, financial market volatility and high uncertainty will affect investor confidence.
The spillover effects of the war in Ukraine, coupled with a slowdown in China’s economic growth, are expected to lower global steel demand growth in 2022. In addition, the continued outbreak of COVID-19 in some parts of the world, especially China, and rising interest rates also pose downside risks to the economy. The expected tightening of US monetary policy will exacerbate the risk of financial fragility in emerging economies.
The forecast for global steel demand in 2023 is highly uncertain. The WISA forecast assumes that the stand-off in Ukraine will end by 2022, but that sanctions against Russia will remain largely in place.
Moreover, the geopolitical dynamics surrounding Ukraine will have profound implications for the global steel industry. These include the adjustment of global trade pattern, the transformation of energy trade and its impact on energy transformation, and the continuous reconfiguration of global supply chain.