Global steel demand outlook for 2024 and 2025: Challenges and recovery prospects

The World Steel Association (worldsteel) has released its updated Short Range Outlook (SRO) for 2024 and 2025, projecting that global steel demand will decline by 0.9% in 2024, reaching 1,751 million tonnes (Mt). However, a modest recovery is expected in 2025, with demand anticipated to increase by 1.2%, reaching 1,772 Mt. This forecast follows three consecutive years of global demand contraction.

According to Dr. Martin Theuringer, Chair of the worldsteel Economics Committee, 2024 has presented significant challenges for the steel sector, largely due to ongoing global economic headwinds. These include declining household purchasing power, tight monetary policies, geopolitical tensions, and a slump in housing construction caused by high financing costs.

Steel demand in China, the world's largest market, is expected to fall by 3.0% in 2024, with an additional decline of 1.0% forecast for 2025. The downturn in China’s real estate sector remains a key factor in this decline, though potential government interventions could offer some upside to these projections.

On the other hand, India is emerging as a bright spot, with strong growth in steel demand projected through 2025. India’s demand is forecast to grow by 8.0% over 2024 and 2025, driven by infrastructure investments and expansion across multiple steel-consuming sectors. In addition, steel demand in the developing world, excluding China, is projected to rise by 3.5% in 2024 and 4.2% in 2025, reflecting recoveries in regions such as the Middle East, North Africa, and Southeast Asia.

Steel Demand in Developed Economies

Developed economies, including the US, Japan, and Germany, are expected to see a 2.0% decline in steel demand in 2024. High costs, coupled with economic uncertainties, have led to weaker demand in these regions. However, 2025 offers a more positive outlook, with a projected growth of 1.9%, driven by recoveries in the US, Japan, and a long-anticipated rebound in the EU.

Sectoral Trends

Manufacturing activity has faced persistent challenges in 2024, with global steel demand impacted by high costs and tighter financing conditions. A notable slowdown occurred in the third quarter of 2024, contradicting earlier expectations of a recovery. Steel demand in the housing construction sector also remained weak throughout the year due to rising interest rates and financing costs, particularly in key markets like China, the US, and Europe.

The automotive sector, which saw strong growth in 2023, is experiencing a significant slowdown in 2024, with declining light vehicle production and concerns over rising inventories. Despite these challenges, global manufacturing and housing construction could see a rebound in 2025, supported by easing financing conditions and improving economic fundamentals.

Infrastructure Investment and the Green Transition

Public infrastructure investment has been a significant driver of global steel demand in 2023 and 2024. This trend is closely tied to efforts to boost productivity, mitigate climate change, and support future industries. Investments in renewable energy and electricity grid expansions are expected to substantially increase steel demand by the end of the decade, particularly in major economies such as China, India, Europe, and North America.

Overall, while 2024 remains a challenging year for global steel demand, cautious optimism surrounds 2025, with potential growth spurred by stabilisation efforts in China, adjustments in interest rates, and continued infrastructure investments.

Source and Photo: Worldsteel