World Steel Association Releases Latest Short-Term Steel Demand Forecast Report for 2024-2025
The World Steel Association announced its latest short-term steel demand forecast report (SRO), indicating a further decline of 0.9% in global steel demand this year, totaling 1.751 billion tons. After three consecutive years of decline, the report projects a rebound in global steel demand in 2025, increasing by 1.2% to reach 1.772 billion tons.
Dr. Martin Theuringer, Chair of the World Steel Association's Market Research Committee and Managing Director of the German Steel Association, commented on the findings: "2024 is undoubtedly a challenging year for global steel demand as the manufacturing sector continues to face multiple hurdles, such as declining household purchasing power, significant monetary tightening, and escalating geopolitical uncertainties. Additionally, persistent weak housing construction, compounded by financing difficulties and rising costs, further exacerbates the downturn in steel demand."
The report significantly lowers the steel demand forecast for most major economies, including China, for 2024, reflecting ongoing manufacturing weakness and persistent headwinds for the global economy. It is anticipated that steel demand in China and most major developed economies will see substantial declines. In contrast, India is expected to maintain strong momentum, with a significant increase in steel demand projected between 2024 and 2025. Most other major developing economies are also anticipated to recover from the slowdown experienced in 2022-2023.
Despite ongoing challenges such as the sustained impact of monetary tightening, rising costs, limited affordability, and geopolitical uncertainties, there is cautious optimism that global steel demand will enter a phase of moderate growth in 2025. Key factors influencing the steel demand forecast for 2025-2026 will include the stabilization of the Chinese real estate sector, the effectiveness of interest rate adjustments in stimulating private consumption and business investment, and the trajectory of infrastructure spending in major economies focused on decarbonization and digital transformation.
The continued downturn in China's real estate sector is expected to negatively impact steel demand, projecting a decline of 3.0% in 2024 and a further 1.0% drop in 2025. However, there is potential for upward revision in the 2025 forecast, given the increasing likelihood of greater government intervention and support for the real economy, which could uplift steel demand in China.
Driven by robust growth in India and a rebound in other major emerging economies, steel demand in developing countries (excluding China) is expected to rise by 3.5% in 2024 and 4.2% in 2025.
Since 2021, India has emerged as the strongest driver of steel demand growth, a trend that is expected to continue. The forecast for India remains strong, with steel demand anticipated to grow by 8.0% from 2024 to 2025, fueled by sustained growth across all steel-consuming sectors, particularly in infrastructure investment.
Following a significant slowdown in 2022-2023, steel demand in other emerging economies worldwide, including the Middle East and North Africa and ASEAN regions, is projected to rebound in 2024.
As steel demand in major steel-consuming economies such as the United States, Japan, South Korea, and Germany sees significant downgrades, developed countries are expected to experience a 2.0% decline in steel demand in 2024. However, optimism for 2025 remains, with a projected increase of 1.9% in steel demand, driven by anticipated recoveries in EU steel demand and a modest rebound in the US and Japan.
Trends in Steel Consumption
Global manufacturing activity continues to show weakness. In our previous forecast, we anticipated a sustained recovery in global manufacturing activity in 2024, which has not materialized. Instead, the sector experienced a contraction in the third quarter, contrasting with the initial growth observed earlier this year and positive signals from leading indicators. One significant factor contributing to the manufacturing slowdown is the reluctance of households and businesses to invest in durable goods. High costs, economic uncertainty, and a tightening financing environment have led to a wait-and-see attitude, delaying spending decisions. The prolonged impact of inflation over the past three years has weakened the purchasing power of many low- to middle-income households, further suppressing demand for manufactured goods.
Despite the challenges at this stage, there are grounds for cautious optimism regarding a potential recovery in global manufacturing in 2025. The resilience of the global economy, a loosening financing environment, pent-up demand, and rising real incomes in major economies (the Eurozone and Japan) will support a revival in private consumption and investment, thereby bolstering global manufacturing activity in 2025.
In 2024, the housing construction sector in most major markets will remain weak, continuing to exert pressure on steel demand, particularly in key regions such as China, the United States, the EU, Japan, and South Korea. Following a strong growth period driven by historically low interest rates, housing construction activities in many major economies sharply declined in 2023 due to significant increases in borrowing costs implemented by central banks to combat soaring inflation. This slowdown is expected to persist into 2024, affecting the construction sector's development and consequently lowering steel demand. However, with the easing of financing conditions, a substantial recovery in the housing construction sector (in the EU, the US, and South Korea) is anticipated starting in 2025.
After achieving double-digit growth in 2023 in major automotive-producing countries, the automotive sector is set for a significant slowdown in 2024. Concerns over inventory increases and slowing electric vehicle sales in key markets are prompting widespread downgrades in light vehicle production forecasts. This shift starkly contrasts with last year's robust performance, highlighting the industry's vulnerability to changing market dynamics and potential future challenges. We expect moderate growth in global light vehicle production in 2025.
Strong investment activity in manufacturing and public infrastructure will support global steel demand in 2024. Major economies are continuing to invest in these sectors, building on momentum from 2023. These strategic investments aim to enhance productivity, create jobs, combat climate change, and ensure competitiveness in future industries. Rising construction costs, labor shortages, and increasing fiscal debt may pose significant challenges for many major economies, potentially limiting sustained growth in these investment areas in the short term.
The global economy's green transition necessitates an unprecedented and complex economic transformation, making strong investment in public infrastructure one of the key driving factors. By the end of this decade, steel demand for expanding the global grid could double to around 20 million tons annually, significantly increasing from the current rate of 10 million tons per year. We expect that by the end of this decade, expanding global renewable energy generation capacity and connecting it to demand centers will require an additional steel demand of approximately 40 million tons, providing considerable support to overall steel demand in major developing economies like China and India, as well as developed economies like Europe and North America.
