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Commodity Market Report 30 September 2021

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Report summary

Tides are turning in 2021 as Chinese demand remains subdued and ROW steams ahead. 1) Has Chinese consumption peaked yet? How swift will the fall be? 2) Do emerging economies like India have enough potential to counter the demand loss from China? 3) How will steelmaking evolve in a decarbonising world and what will be its impact on metallics demand? The steel market long-term outlook provides detailed supply and demand analysis and price forecasts for the steel market out to 2035. The latest dataset upto 2050 is available now on the Wood Mackenzie portal.

Long-term demand outlook remains subdued
- Broad-based recovery in 2021; China to stay flat on high base
- Demand growth to slow over the longer term
Global supply to rise 0.5% annually till 2035
- China slows in 2021, green shoots emerge across RoW
- India and Southeast Asia to lead in the long term, Chinese output will fall
- Evolving decarbonisation goals to alter steelmaking methods
China
- Demand
- Medium-term demand: consumption to plateau to 2022 before sliding down
- Long-term demand: weak demographics make ideal case for demand to decline
- Supply
- 2021 crude steel production to grow at 2% year-on-year
- Medium term: metallics share to shift with increased focus on scrap use in steelmaking
- Long term: DRI production to ramp up
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
- Evolving demographics and low penetration offer tremendous growth opportunities for India
- Supply
- Second Covid wave failed to impact steel supply drastically
- Indian integrated steel players to go big on capacity expansions
- Green steel to make inroads but BOF will remain dominant technology in the long term
Japan and South Korea
- Demand
- Japan
- Steel to partially recover from COVID-19 impact
- Long-term prospects remain weak
- South Korea
- South Korea continues to outperform Japan
- Automobile and shipbuilding to lead in the medium term
- Growth to falter over long term
- Supply
- Japan
- Supply to be controlled via restructuring measures
- South Korea
- Japan leads the fight against decarbonisation
Southeast Asia
- Steel demand to rebound 6% in 2021 after a dismal 2020
- Bullish long-term prospects on strong fundamentals
- Infrastructure thunder grips the region
- Housing and automotive production to offer support
- Rising domestic steel output will counter imports
- Rise in BOF output will support hot metal; growth in scrap and DRI to accelerate post 2035
- Shift away from blast furnaces accelerates in the late 2030s
Turkey
- Steel demand turns a corner
- Supported by exports, Turkish production has fared well
Middle East
- Steel demand revived in 2020, growth outlook modest
Iran
- Steel on a modest growth trajectory
- Iran to exceed 55Mt steel capacity target by 2025, growth in exports to slow
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
Russia
- Russian automotive industry – bullish growth rates but from a low base
- National projects are driving construction activity
Other CIS and Ukraine
- Ukrainian steel production will not return to its former glory
- Central Asian countries have strong growth prospects
US
- Construction: (modestly) better prospects
- Automotive: long-term fall is (still) inevitable
- Machinery to grow, but prices must ease
- EAF dominance to expand, but imports to dampen steelmakers’ ambitions
- The path to green steel: H-DRI coming to the scene
Mexico and Canada
Brazil
South America (ex-Brazil)
- Iron ore prices drop helps steel costs
- Coal
- Scrap prices starting to weaken
- Steel prices to take few more 2-3 years to come back to 2020 levels
- Steel price forecast
- Scrap demand and prices
- Metallics price forecast

Tables and charts

This report includes 77 images and tables including:

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

Regional steel production outlook (2020-2035)
Crude steel production forecast changes
Apparent steel consumption forecast changes
Southeast Asia: demand outlook by country
Vietnam and Indonesia to expand demand share
Middle East: steel consumption outlook
EAF to remain the dominant route
Steel output to rise at a 2.5% CAGR till 2035
Utilisation levels to improve for UAE
North Africa: steel consumption outlook
Rising steel output to elevate utilisation levels
DRI production to rise 2% annually till 2035
Scrap demand to triple by 2035
Canada's lost steel demand from cancelled pipelines
Mexico's sectoral industrial production
Demand, supply and trade
South America (ex-Brazil) steel demand
Global average crude steel production costs
Residential construction to decline but non-residential to remain stable in the medium term
Growth in infrastructure fixed asset investment (two-year average) on a downward trajectory
Near-term steel demand
Medium-term steel demand
Receding birth rate and contracting working population suggest weak demographics
Urbanisation to witness a steep fall during 2020-2025
Margins tumbled in May causing prices and production to tame
Sharp decline in monthly production from April
Metallics mix to change in light of emissions control
Hydrogen-based steel to kick off after 2040
Steel production forecast 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
South Korean demand to overtake Japan in 2026
Japan’s steel capacity to shrink 22Mt by 2035
Crude steel production: Japan and South Korea
Hydrogen-based steel production outlook
Key emission reducing projects in Japan and South Korea
Southeast Asia: Key infrastructure projects
Share of BOF capacity to rise
Finished steel imports as % of demand to decline
Share of HM to rise; DRI to catchup later
Hydrogen-based steel production outlook
EU ETS cap for total industry and EU + UK crude hot metal production indexed to 2019 – the year when integrated sites would have had few allowances.
European steelmaking strategies
Key emission reducing projects in Europe
Capacity surge will be led by Iran
Overcapacity in Iran as production fails to catchup
National projects: investment shares by sector
Russian exports should increase to close the emerging global supply gap after 2030
Bipartisan Infrastructure Framework capital allocation
Construction demand
Steelmaking by route
EAF burden mix
BOF vs EAF crude steel cash costs 2021
Global crude steel costs 2021
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