Worldsteel has revised up its forecast for finished steel demand growth outside China thanks mainly to strong manufacturing activity and developed economies outperforming earlier expectations.

Global steel demand will grow by 4.5% on-year in 2021 to 1.85 billion tonnes after 0.1% growth in 2020, worldsteel says in its latest short-range outlook (SRO). This compares to its 5.8% growth forecast in April. The downward revision is purely due to deceleration in China, where demand is now seen shrinking 1% this year.

Developed economies, like the US, EU and certain Asian nations, have managed to minimise the impact of the latest Covid-19 infection wave on economic activity in 2021, using more targeted and localised lockdowns. After falling by 12.7% in 2020, developed economies’ steel demand will increase 12.2% in 2021 and 4.3% in 2022, reaching its pre-pandemic level, worldsteel says.

However, supply chain bottlenecks and the services sector still lagging behind are preventing a more robust recovery.

“The Chinese economy recovery has slowed since June, leading to a steel demand contraction of 13.3% in July and then 18.3% in August,” worldsteel director general Edwin Basson said during Thursday’s virtual SRO press conference. “The sharp deceleration is partly attributable to small waves of infections and the government cap on steel production. No growth in Chinese steel demand is expected in 2022.”