![]() ![]() The slowing global economy poses further downside risk for China. ![]() Significant downside risks exist if these assumptions are not met. Steel demand in 2023 is expected to remain flat under the assumption that small new stimulus measures are to be introduced and lockdown measures will be largely removed in the later part of 2022. In 2023, new infrastructure projects and a mild recovery in the real estate market could prevent further contraction of steel demand. For the whole year, steel demand is likely to fall by 4.0% with the low base effect of the second half of 2022. Steel demand in China contracted by 6.6% in the first eight months of 2022. However, as long as the real estate sector remains depressed, it will be difficult for steel demand to rebound significantly. Infrastructure investment is recovering owing to government measures, and will provide some support to steel demand in late 20. Despite the government’s efforts to boost the real estate market, a major turnaround is not expected since buyers’ confidence remains weak due to strict COVID measures and developer bankruptcies. All major real estate market indicators are in negative territory, with floor space under construction contracting for the first time in its modern history. The slump in the property market has deepened, with investment in real estate slowing to its worst in 30 years. ![]() The recovery of Chinese steel demand in late 2021 reversed in the second quarter of 2022 as repeated COVID lockdowns led to a drastic cooling of the Chinese economy. Among those are the effect of monetary tightening, continuation of inflation, the direction of the Chinese economy and its COVID policy, the potential crisis of gas supply in Europe, and the aggravation of the Russian-Ukraine war with unexpected consequences. Uncertainty remains elevated for the global economy and the balance of risks is largely skewed to the downside. Assuming that the war will not end soon and China continues to maintain its strict COVID containment policy for the time being, supply bottlenecks will not dissipate completely, despite slowing demand. Supply chain problems eased somewhat in 2022, but continued to constrain production activities as new disruptions have emerged. Rising interest rates and high inflation will affect investment and consumer spending, and will hurt steel-intensive sectors such as construction, machinery, and consumer durables. The Fed’s aggressive interest rate hikes and strong US dollar are propelling recession risks in the US and will have a ripple effect for the rest of the world through capital outflows in the emerging economies, increasing the financial stress of indebted countries and consumers. In particular in Europe, where dependence on Russian gas supply is high, economic activities, as well as confidence, are heavily affected by the energy crisis. The Russia-Ukraine war exacerbated the inflationary pressure that was ignited by the post-lockdown supply and demand imbalances as the war disrupted energy and food supplies and intervened with the normalisation of supply chains. The global economic environment has deteriorated significantly in 2022 as inflation risk fully materialised along with other major headwinds, namely the Russia-Ukraine war and China’s lockdowns. Particularly the EU outlook is subject to further downside risk due to the high inflation and the energy crisis that have been exacerbated by the Russia-Ukraine war.” General The prospect for 2023 depends on the impact of tightening monetary policies and central banks’ ability to anchor inflation expectations. As a result, our current forecast for global steel demand growth has been revised down compared to the previous one. High energy prices, rising interest rates, and falling confidence have led to a slowing in steel using sectors’ activities. Máximo Vedoya, CEO of Ternium, and Chairman of the worldsteel Economics Committee, said, “the global economy is affected by persisting inflation, US monetary tightening, China’s economic deceleration, and the consequences of Russia’s invasion of Ukraine. High inflation, monetary tightening, and China’s slowdown contributed to a difficult 2022, but infrastructure demand is expected to lift 2023 steel demand slightly.Ĭommenting on the outlook, Mr. The current forecast represents a downward revision over the earlier forecast, reflecting the repercussion of persistently high inflation and rising interest rates globally. In 2023 steel demand will see a recovery of 1.0% to reach 1,814.7 Mt. worldsteel forecasts that steel demand will contract by 2.3% in 2022 to reach 1,796.7 Mt after increasing by 2.8% in 2021. The World Steel Association (worldsteel) has today released an update of its Short Range Outlook (SRO) for 20. ![]()
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