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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
- Production to remain stable in 2022
- Medium term: EAF penetration to slow down due to delay in peak carbon deadline
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
Iran
- Power disruptions drag steel demand in 2021; growth trajectory to slow
- Supply chain challenges to falter production in near term
Saudi Arabia and UAE
- Investments in construction to support steel consumption
North Africa
Egypt
- Demand rebounds post lifting of construction ban
- Steel production aided by import safeguards
Algeria
- Demand to remain subdued
- Steel production to rise, deterring imports
MENA: Metallics Demand
MENA: Metallics Demand
US
- Construction: on the rise while Biden’s plan last; long term remains lacklustre
- Manufacturing: automotive’ s calvary to begin by 2030; machinery to modestly grow
- EAF’s dominance to expand
- Changing metallics demand: the rise of DRI
Mexico and Canada
Brazil
- Iron Ore
- Coal
- Scrap
- Steel prices will not normalise despite lowering raw material costs
- Steel price forecast
- Scrap prices

Tables and charts

This report includes 69 images and tables including:

Demand growth by region
Global steel production outlook: EAF share to rise

Regional steel production outlook (2021-2050)
Japanese steel demand on a decline
Japan’s steel capacity to shrink 33Mt by 2050
South Korean steel demand to decline
South Korean capacity to witness a slight uptick
Southeast Asia: Demand outlook by country
Middle East: steel consumption outlook
North Africa: steel consumption outlook
Rising steel output to elevate operating rates
DRI production to rise 1.8% annually till 2050
Scrap demand to triple by 2035
DRI production to rise 2% annually till 2035
Scrap demand to triple by 2035
Canada's finished steel consumption
Mexico's Car industry and Construction sector
Brazil production and demand recovery
Global average crude steel production costs
Steel demand posted double-digit growth in H1 2021 before turning negative in October
Demand to remain rangebound in 2022; construction decline to drag on demand thereafter
Chinese demographics to weaken
Urbanisation to witness a steep fall during 2020-2025
Steel demand outlook (2021-2050)
Hydrogen steelmaking in China
Overall steel production by technology
Growth rates by sector (%)
Steel demand outlook (Mt)
Monthly crude steel production (Mt)
Exports remained strong in 2021
Capacity additions by large Indian steelmakers
Steel capacity and utilisation levels
Steel production by technology
Steel supply mix is in for an overhaul
Hydrogen-based steel production outlook
Crude steel production: EAF to gain prominence
Hydrogen-based steel production outlook
Emission targets
Key projects
Key infrastructure projects
BF-BOF capacity on a rise
Finished steel imports as % of demand to decline
Hot metal production to gain momentum
Hydrogen-based steel production outlook
European steelmaking strategies
Key emission reducing projects in Europe
Capacity surge will be led by Iran
EAF to remain the dominant route
Utilisation falls as production fails to catchup
Steel output to rise 2% annually till 2050
Utilisation levels to improve over the long term
Infrastructure Investment and Jobs Act capital allocation and steel intensity by area
US demand by sector
US trade and production
Steelmaking by route
EAF burden mix
China hot rolled coil price and cost
Europe hot rolled coil price and cost
China rebar price and cost
Europe rebar price and cost
US hot rolled coil price and cost
US rebar price and cost
HRC price forecast
Rebar price forecast
Scrap price forecast
Metallics price forecast