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Commodity Market Report 01 April 2023

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Report summary

Steel will witness a tale of two halves in 2023 as the macro headwinds are still at play. We expect the H2 2023 to fare better as Chinese demand garners momentum, inflation and credit policy eases, and supply chain pressures retract. Chinese consumption will inch towards recovery, led by a gradual rise in property investments, pent-up consumer spending and a robust infrastructure pipeline. We have revised our near-term outlook slightly downward as the government-led stimulus is weaning due to rising public debt and inflation-linked spending cuts. We believe energy and supply chain challenges will take time to resolve. Over the long term, China will be a major deterrent. Global growth will piggyback on strong demand momentum from emerging economies like India and Southeast Asia. The steel supply mix is in for an overhaul as decarbonisation initiatives intensify. A switch over to low-carbon steelmaking will elevate the production share of EAF from 27% in 2022 to 48% by 2050.

A tipsy-turvy ride ahead for steel demand
- Asia and Americas to aid demand recovery in 2023
- Demand growth to slow over the long term as China falters
Global supply to echo demand, rise at 0.6% CAGR by 2050
- Chinese output to edge up, India will continue to ride the momentum in 2023
- India and Southeast Asia to be the torchbearers for long-term supply growth; Chinese output falls amid dwindling demand
- Evolving decarbonisation initiatives to alter the steelmaking landscape
China
- Demand
- Steel demand in 2022 declined 3% year-on-year due to a sluggish property sector
- Demand to improve marginally in 2023, led by the construction sector
- Weakening demographics to reduce long-term steel demand
- Carbon taxes’ (including CBAM) implications on China’s steel industry
- Supply
- Crude steel production to edge up in 2023
- EAF share continues to grow for decarbonisation in the medium term
- H-DRI will ramp up in the long term but BF-BOF to remain dominant
- Demand
- Supply
- Resurgence of exports to boost steel production by 10% in 2023
- Indian steel capacity to boom in the next decade
- BOF to remain dominant steelmaking technology in the long term
Japan
- Steel demand to recover from macro jolts. Near-term outlook to stay muted.
- Long-term prospects remain weak
- Capacity restructuring seems inevitable
- Supply to follow in demand footsteps
South Korea
- South Korean demand to outperform Japan in the near term
- Automobile and shipbuilding to lead in the medium term
- Growth to falter over the long term
South-East Asia
- Steel consumption stayed flat in 2022; to rebound 4% in 2023
- Long-term prospects remain bullish on solid fundamentals
- Infrastructure to be a key growth determinant
- Housing and automotive production will support consumption
- Rise in BOF output will support hot metal; decarbonisation initiatives to accelerate post 2035
EU and the UK
- Macroeconomic outlook
- Russia/Ukraine war crippled European demand in 2022
- Switch to electric vehicles to surpass long term auto demand
- Green infrastructure to boost steel demand from construction sector
- Trade diversification following Russian sanctions
- EAF to become dominant production technology in 2030s
- CBAM and ETS to drive up long-term carbon prices
- European long-term production strategies
Turkey
- Earthquake recovery to boost medium-term steel demand
- Production to trend lower amid plant closures and global macro headwinds
- Exports to stay restricted amid rising domestic consumption
- Positive long-term outlook
Russia
- DEMAND
- Steel demand in 2022 fared better than anticipated despite the war-led disruptions
- Sanctions to bite and keep steel demand under pressure
- SUPPLY & TRADE
- Supply to feel pressure until exports remain restricted; long term growth pegged at 1% by 2050
Ukraine
- DEMAND
- Bleak demand outlook for the next few years before reconstruction demand surge kicks in
- SUPPLY & TRADE
- Exports to struggle in the near term, long-term growth will be healthy
Middle East
- Steel demand shot up in 2022 post a feeble few years, with modest growth expected in 2023.
- Iran to exceed 55Mt steel capacity target by 2025, continue to lead in long term
Iran
- Iranian growth slowed due to persistent power shortage issues
- Supply-side issues to haunt steel mills in the near term
Saudi Arabia and UAE
- A raft of construction investments come to the aid of steelmakers
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
US
- After IIJA and IRA, construction to grow at a lethargic pace
- Automotive’s (steel) calvary to begin around 2030; machinery to modestly grow
- EAF’s dominance to expand
- Metallics demand: the rise of DRI
Mexico and Canada
Brazil
- Iron Ore
- Coal
- Scrap
- Russia/Ukraine war caused global steel price upheaval in 2022
- Steel prices to normalise, steered by raw material price trends
- Steel price forecast
- Scrap demand and prices

Tables and charts

This report includes 71 images and tables including:

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

Regional steel production outlook (2022-2050)
Japanese steel demand on a decline
Japan’s steel capacity to shrink by 20% by 2050
South Korean steel demand to saturate
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 1.6% annually till 2050
Scrap demand to triple by 2050
Canada's finished steel consumption
Mexico's Car industry and Construction sector
Brazil production and demand recovery
Global average crude steel production costs
Decarbonisation outlook
Steel demand in negative growth yet on a rising trajectory throughout 2022
Demand to rebound in 2023; construction decline to drag on demand after that
Falling birth rate and contracting employed population suggest weak demographics
Urbanisation to drop significantly between 2021-2025
Steel demand outlook (2021-2050)
Overall steel production by technology
Hydrogen steelmaking in China
Capital expenditure
Steel demand outlook (Mt)
Per capita consumption (kgs)
Crude steel capacity outlook (Mt)
Metallics demand outlook (Mt)
Steel production outlook (Mt)
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 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
EU27+UK steel demand by industry to 2050 (million tonnes)
EU27+UK production and trade outlook to 2050
Outlook of steel production by technology
Outlook of EU27+UK Metallics demand
Hydrogen-based DRI EAF production forecast to 2050
European steelmaking strategies illustration
Turkish steel mills capacity
Demand-supply outlook (Mt)
Export outlook (Mt)
Demand outlook (Mt)
Production and export outlook (Mt)
Iran will lead the capacity surge
Utilisation falls as production fails to catchup
Steel output to rise 2% annually till 2050
Utilisation levels to improve over the long term
US demand by sector
US trade and production
Average EAF burden mix
EAF vs BF-BOF share in total steelmaking
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