BMI, a unit of Fitch Ratings, recently published a report indicating that global steel production is expected to increase by 1.2% year-on-year in 2024, despite a slowdown in the global economy.
The report suggests that global economic growth will not be high this year due to the delayed recovery of China's real estate sector and economic slowdown in the US and EU. Continued high interest rates, inflation and trade conflicts between developed and emerging economies are expected to negatively impact the global industrial outlook and hinder the recovery of steel production.
On the demand side, the manufacturing sector is weighing on growth in major markets and the global economic outlook remains subdued.
However, there are positive signs such as increased automotive production in major countries due to easing supply chain disruptions; growth in manufacturing and infrastructure investment in India, ASEAN and the Middle East; a strong global shipbuilding market; and increased infrastructure investment in North America, all of which are expected to boost overall steel demand. In particular, the increase in global steel consumption in 2024 is expected to be driven by robust demand from India.
BMI has also revised its forecast for the average global steel price in 2024, lowering it from $740 per tonne to $700 per tonne. This revision is due to continued weak demand and aggressive export activity from China, the world's largest steel producer, which are expected to keep global steel prices under pressure.
China's economy is currently facing multiple challenges, including a delayed recovery in manufacturing exports due to trade disputes with developed countries, with long-term stagnation in the real estate sector being the most significant issue for the steel industry.
The report highlights that steel prices have declined in all major markets since the beginning of the year, with a 6.9% decline in China over the same period.
BMI forecasts that global steel prices will continue to decline over the long term, with an average price of $730 per ton in 2025 and $675 per ton in 2026-2027.
According to the report's forecasts, the slowdown in China's steel consumption growth and increased protectionism in the global market will lead to increased production and a weakened market in the affected countries, resulting in lower prices in the medium term.
Major countries such as the US and EU are increasing protectionism through carbon regulations and tariffs, with the UK and Canada actively considering the introduction of carbon regulations. Among emerging markets, Latin American countries have proactively increased tariffs on Chinese steel products and are considering the introduction of carbon regulations, while India is implementing tariffs and quality certification regulations.
As a result of increased protectionism, steel production is expected to increase in North and Latin America, with continued production growth also expected in India.
The report also highlights that "the rise of environmentally friendly steel produced by electric arc furnaces (EAFs) will trigger a paradigm shift in the market, replacing products produced by traditional blast furnace methods".
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