Surging Global Steel Demand Outpaces Recovering Production

IndexBox has just published a new report: 'World - Crude Steel And Steel Semi-Finished Products - Market Analysis, Forecast, Size, Trends and Insights'. Here is a summary of the report's key findings.

The beginning of 2021 saw a sharp increase in the steel demand, while metallurgical plants were still recovering from the operational downtime incurred during the lockdown. This market disbalance leads to an increase in steel prices. The recovery of the automotive sector and other downstream industries in 2020, at a faster pace than expected, generates the conditions for robust steel demand in the medium term.

Key Trends and Insights

In 2020, global steel demand, according to estimates from The World Steel Association, declined by ‑2.4% against the previous year. Countries worldwide were affected by this decline, but China saw demand increase by +8.0%. The Middle East (-19.0%), Africa (-16.0% ), the USMCA countries (-15.3%) and the European Union (‑15.2%) recorded the most significant annual slump in demand.

At the end of 2020, global industrial manufacturing started to recover, and in Q1 2021, the demand for steel from consuming industries began to exceed still readjusting market supply, leading to a surge in steel prices. The price of STEEL HRC FOB CHINA (ARGUS) on the London Metal Exchange surged from $685 (March 2021) to $791 per ton (April 2021).

Lockdown during the COVID-19 pandemic resulted in most countries experiencing a significant decline in production. In April 2020, the slump in EU steel alloy output amounted to -33.3% against April 2019, emerging into recovery only in November 2020 (+5.5% against November 2019). The stagnation seen in the downstream industries, including the automotive sector, contributed to the decline in production.

Global consumption is forecast to increase in 2021 by +4.1% year-on-year. The EU (+11.0%) and other European countries (+11.9%) are projected to see the fastest rates of consumption growth, spurred by a full recovery in the automotive and construction sectors, and other downstream industries.

In line with the Paris Agreement, modern metallurgical plants now recover waste gas emissions to curtail the discharge of greenhouse gases. Proactive research is now being conducted into low-carbon technologies, such as the use of electrolysis to recover iron ore and biomass as a substitution for coal, as well as hydrogen as a reducing agent. The current market growth will promote investment for energy-efficient and low-carbon technologies, against the planned introduction by the European Union of a carbon tax, resulting in the inevitable technological upgrading and modernization of steel smelting facilities.

China to Feature Strong Stable Demand for Steel while the U.S. to Remain the Leading Importer

The global market for raw steel and steel semi-finished products increased by 7.3% to $1,246.6B in 2019. The market value increased at an average annual rate of +3.6% from 2012 to 2019.

China (995M tons) constituted the country with the largest volume of consumption of raw steel and steel semi-finished products, accounting for 55% of total volume. Moreover, consumption of raw steel and steel semi-finished products in China exceeded the figures recorded by the second-largest consumer, India (109M tons), ninefold. Japan (96M tons) ranked third in terms of total consumption with a 5.3% share (IndexBox estimates).

In value terms, China ($826.7B) led the market, alone. The second position in the ranking was occupied by the U.S. ($189.5B). It was followed by Russia.

The countries with the highest levels of raw steel and steel semi-finished products per capita consumption in 2019 were Japan (752 kg per person), China (682 kg per person) and Germany (483 kg per person).

In 2019, the amount of raw steel and steel semi-finished products imported worldwide reduced to 55M tons, waning by -12.2% on the previous year. In general, imports saw a mild contraction. The most prominent rate of growth was recorded in 2014 when imports increased by 8.2% against the previous year. Over the period under review, global imports reached the maximum at 62M tons in 2018, and then dropped in the following year.

In value terms, imports of raw steel and steel semi-finished products shrank markedly to $30.1B (IndexBox estimates) in 2019. Over the period under review, imports saw a noticeable setback. The pace of growth appeared the most rapid in 2018 with an increase of 26% year-to-year. Over the period under review, global imports hit record highs at $40.3B in 2012; however, from 2013 to 2019, imports remained at a lower figure.

In 2019, the U.S. (7.3M tons), followed by Italy (4.8M tons), Indonesia (4.8M tons), Taiwan (Chinese) (3.4M tons), Thailand (3.1M tons), the Philippines (2.7M tons) and Belgium (2.5M tons) were the key importers of raw steel and steel semi-finished products, together committing 52% of total imports. The following importers - South Korea (2.2M tons), Turkey (1.7M tons), Egypt (1.5M tons), France (1.5M tons), Spain (1.2M tons) and Germany (1.1M tons) - together made up 17% of total imports.

In value terms, the U.S. ($4.9B), Italy ($2.6B) and Indonesia ($2.2B) appeared to be the countries with the highest levels of imports in 2019, together accounting for 32% of global imports. Thailand, Taiwan (Chinese), the Philippines, Belgium, South Korea, France, Germany, Turkey, Spain and Egypt lagged somewhat behind, together accounting for a further 36%.

Source: IndexBox Market Intelligence Platform