Worldsteel has revised down its 2022 global steel demand growth forecast to 0.4% on-year, giving 1.84 billion tonnes. This follows 2.7% growth in 2021. The correction is due to the impact on trade of the Russian invasion of Ukraine, which has created devastating effects on Ukraine, consequences for Russia and a major impact on Europe.

Furthermore, the war will also impact the steel supply chain, and steel raw materials and energy prices in 2022, worldsteel said during Thursday’s short-range outlook press conference attended by Kallanish. Other downside risks come from the continued surge in Covid-19 infections in some parts of the world, especially in China. The expected tightening of US monetary policy and rising interest rates will hurt emerging economies financially.

“In 2021, recovery from the pandemic shock turned out to be stronger than expected in many regions, despite continuing supply chain issues and Covid waves,” said worldsteel economics committee chairman Maximo Vedoya. “However, a sharper-than-anticipated deceleration in China led to lower global steel demand growth in 2021. For 2022 and 2023, the outlook is highly uncertain. The expectation of a continued and stable recovery from the pandemic has been shaken by the war in Ukraine and rising inflation.”

Despite the Covid-led economic slowdowns and the manufacturing sector’s supply chain constraints, steel demand in the advanced economies recovered strongly in 2021. However, owing to inflationary pressure coupled with the Ukraine war, demand growth has weakened in 2022.

Steel demand growth outlook in the EU has plunged due to its high dependency on Russian energy, as well as refugee inflows. After a surge of 16.5% in 2021, steel demand growth in the developed world is seen being restricted to 1.1% and 2.4% in 2022 and 2023, respectively.

Owing to stringent measures in the real estate industry by the Chinese government, Chinese steel demand witnessed a major slowdown in 2021. However, on the back of the government’s efforts to boost infrastructure investment and stabilise the real estate market, demand is expected to remain flat in 2022. The stimuli introduced in 2022 are likely to support small positive growth in steel demand in 2023.

Developing economies – excluding China – will continue to face challenges from the Covid-led worsening external trade environment, the Russia-Ukraine war and the US monetary tightening. Owing to this, steel demand in the developing economies will grow by only 0.5% in 2022 and then 4.5% in 2023, worldsteel said. ASEAN and Middle East and North Africa will see marginal growth of 3.5% and 3.2%, respectively, in 2022.