The 27 countries of the European Union plus the United Kingdom will have to wait until 2025 for a proper steel demand recovery. The World Steel Association sees EU steel demand increasing only mildly this year in "a technical rebound" before a more significant 5.3% rise in 2025. In 2024 steel demand is seen only 1.5 million tonnes higher than 2020, the year of the pandemic.

Europe is the region currently facing the biggest challenges, Kallanish gleans from worldsteel's Short Range Outlook (SRO) steel demand forecast for 2024 and 2025. Steel-consuming sectors remain impacted by an unstable geopolitical landscape as well as uncertainty driven by high inflation, monetary tightening and partial withdrawal of fiscal support, while energy and commodity prices remain high.

“The persistence of these downside factors resulted in a major drop in the region’s steel demand in 2023 to the lowest level since the year 2000 and to substantial downward revisions of the forecast for this year,” worldsteel says.

European demand stood at 136.8mt in 2023 and should reach 140.7mt this year with a modest 2.9% surge. Demand is however predicted to rise y-o-y by 5.3% to 148.1mt in 2025.

Germany will remain among the world’s top ten steel-consuming regions together with China, India, United States, South Korea, Japan, Russia, Turkey, Mexico and Brazil. In 2023 Germany consumed 28mt of steel and it is forecast to absorb 28.9mt in 2024 reflecting a 3.2% hike. In 2025 the nation is expected to use 31.8mt with a notable 10% y-o-y hike.

The crisis in residential construction activity is expected to continue this year in most major markets with a recovery forecast for 2025. The sector suffers high construction costs and labour shortages which might reduce growth in public infrastructure and manufacturing investments in the short-term. Global manufacturing activity should start improving in 2024 although it remains affected by weak demand, high costs and tight financing. In contrast, the automotive industry which showed a strong recovery in 2023 should show weak growth in 2024.

The green transition will remain a strong driver behind public infrastructure investments. “A recent Economics Committee study estimated that global steel demand for new wind energy installations will triple by 2030 to around 30mt when compared with the early 2020s,” the report says. It adds that while the share of steel demand for wind energy installations will remain relatively low in total global demand, it may give quite a noticeable support to overall steel demand in certain regions such as Europe.

While globally geopolitical and inflationary tensions persist, a faster end to inflation and further monetary policy easing could support steel demand, particularly from the construction sector as well as strengthening investment in decarbonisation and public infrastructure against climate change risks.