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Commodity Market Report 31 March 2022

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Report summary

The steel industry entered 2022 amid uncertainty due to the resurgence of Covid cases and slowing construction investments. It is now reeling under the ambiguity of the Russia-Ukraine conflict. Chinese steel demand will flatline in 2022. However, government spending will support demand during the year. Global growth to piggyback on strong demand momentum in India and Southeast Asia. The steel supply mix is in for an overhaul as decarbonisation initiatives intensify. We have incorporated carbon emission outlook, hydrogen-based steel production and carbon offset measures such as CCUS demand in our report. Our strategic planning outlook answers 1) How will Chinese demand and production fare? What will be the impact on global market dynamics? 2) Impact of decarbonisation on steel supply landscape and carbon emission outlook 3) How will prices fare amid rising uncertainties? The global steel strategic planning outlook provides demand-supply analysis and price forecasts out to 2050.

Long-term demand outlook remains subdued
- Emerging economies like India and Southeast Asia to keep demand afloat in 2022
- Demand growth to slow over the longer term
Global supply to rise 0.6% annually till 2050
- Chinese output to plateau in 2022, India to race ahead
- India and Southeast Asia to lead in the long-term, Chinese output to plummet
- Evolving decarbonisation initiatives to alter the steelmaking landscape
- The unravelling of events amid the Russia-Ukraine conflict poses the biggest near-term risk to our forecast
China
- Demand
- Steel demand in 2021 declined by 3% due to weak construction demand
- Near and medium-term: Consumption to remain range-bound in 2022; Construction sector to drag demand down thereafter
- Covid poses risks to our 2022 estimates
- Long-term demand: slowing urbanisation and decline in population to reduce steel demand
- Supply
- Crude steel production to remain stable in 2022
- Strong production in December restricted 2021 production decline to 3% year-on-year
- 2 more item(s)...
India
- Demand
- Steel demand to rise 10% year-on-year but remain below pre-pandemic levels
- Medium-term demand to be driven by construction sector
- Long-term demand will be driven by low urbanisation and steel penetration
- Supply
- Indian capacity to surge as steelmakers add over 90 Mt in the next decade
- India to produce hydrogen steel in the 2030s, but BOF production to remain dominant
Japan
- Steel demand recovers from COVID jolt. Near term outlook to stay muted.
- Long-term prospects remain weak
- Capacity restructuring seems inevitable
- Supply to be controlled via restructuring measures
South Korea
- South Korean demand to recoup pandemic losses in 2021; outperform Japan in the near term
- Automobile and shipbuilding to lead in the medium term
- Growth to falter over long term
- The fight on decarbonisation
South-East Asia
- Steel demand to rebound 8% in 2022 after a subdued performance in 2021
- Long-term prospects remain bullish on strong fundamentals
- Infrastructure to be a key growth determinant
- Housing and automotive production will support consumption
- Rising domestic production to falter finished steel imports
- Rise in BOF output will support hot metal; decarbonisation initiatives to accelerate post 2035
EU and the UK
- Automotive
- Construction
- Trade and the macro-economy
- European steelmakers truly in the steel decarbonization race
- European steelmaking strategies
- DRI production
- Shift away from blast furnaces accelerates in the late 2030s
Turkey
- Steel demand improved further in 2021
- Supported by exports, Turkish production has fared well
Russia
- Russian automotive industry – growing but from a low base
- National projects are driving construction activity
- Steel production in Russia will outpace demand
Other CIS and Ukraine
- Ukrainian steel production revised lower in an uncertain environment
- Central Asian countries have strong growth prospects
Middle East
- Steel demand declined in 2021, expected to rebound in 2022.
- Iran to exceed 55Mt steel capacity target by 2025, continue to lead in long term
10 more item(s)...