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Commodity Market Report 30 March 2021

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Report summary

Globally, steel markets flat-lined in 2020 - zero supply and demand growth. In China, of course, expansion continued - demand grew by 11%. But pandemic induced shutdowns in the rest-of-the-world offset those gains. Three questions now need answering: 1) Can China keep growing? 2) How long will the ROW recovery take? 3) In an increasingly environmentally concious world, does emissions-intensive steelmaking have a future? The Global steel market long-term outlook provides detailed supply and demand analysis and price forecasts for the steel market out to 2040.

Zero supply and demand growth for 2020
- How long will the recovery take?
- China: What recovery?
- The RoW
- Other contributors to global growth – big rates, but smaller tonnages
- Limited demand growth potential elsewhere
- 2020 marks an acceleration in the shift towards greener steelmaking
- Long-term price forecast
Supply
- 1) Growers
- 2) Adapters
- 3) Stagnaters
China
- 2020-2025: upward revision
- China’s 14th five-year plan: quality over quantity
- What does the 14th five-year plan mean for Chinese steel demand?
- Property: increased opportunities for non-residential construction in medium term
- Infrastructure: demand to shift from traditional infrastructure to new infrastructure
- Manufacturing: uptick coming despite expected decline in manufacturing GDP
- Long- term steel demand: weakening demographics will cause slide; auto will be the only sector to see demand growth
- Supply: 2021 to be another growth year for production, albeit a marginal rise
- BF-BOF will remain the dominant steelmaking route in the long term
India
- Demand
- Supply
Japan and South Korea
Japan
- Coronavirus permanently dents steel industry
- Demand to rebound slightly from 2020 lows but will fail to breach 2019 level
- Long-term prospects appear weak
- Steel supply to be restricted by shutting blast furnaces
- Traction on steel decarbonisation
South Korea
- South Korea outperformed Japan in the pandemic year
- 2021 steel output to near 2019 level; domestic demand to revive
- Construction and shipbuilding to lead in the near term
- Growth to falter over long term
- POSCO leads the green steel initiative
Southeast Asia
- Southeast Asian steel demand fell 6% year-on-year in 2020
- Few countries evaded the pandemic impact
- Demand prospects remain strong
- Infrastructure will be the growth engine
- Other end-use segments to lend support
- Steel production to grow amid rising integrated capacities and import curbs
EU and the UK
- Automotive
- Construction
- Trade and the macro-economy
- European steelmaking is evolving, slowly, to bring down emissions
- Falling production is bringing down emissions in the near term
- Steelmakers will have to act to limit future emissions
Turkey
- Steel demand is fragile
- Supported by exports, Turkish production has fared better
Middle East
- Steel demand to rebound in 2021; modest rise expected in near term
- Growth to moderate over long term
Iran
- Steel demand defies US sanctions
- Iran to near 55 Mt capacity target by 2025, steel output and exports to spur
Saudi Arabia and UAE
- Construction and foreign investment to aid steel demand
North Africa
Egypt
- Demand to rebound after lifting of construction ban
- Steel production to outpace demand growth
Algeria
- Domestic demand to remain feeble
- Capacity additions to boost steel output and deter imports
Russia
- Steel production in Russia will outpace demand
Other CIS and Ukraine
- Ukrainian steel production will not return to its former glory
- Central Asian countries have strong growth prospects
USA
- Automotive – modest growth till 2025, decline in the long term
- Construction – strong recovery in near term
Canada and Mexico
Brazil
Other South America
- Iron prices drive up steelmaking costs
- Coal
- Rising scrap prices expected to persist
- Will Converging price premia prevail?
- Indian price premia over China will continue to disappear
- Scrap demand and prices

Tables and charts

This report includes 42 images and tables including:

Crude steel production: Japan and South Korea
Japan’s steel capacity to shrink by 2040
Southeast Asia: demand outlook by country

Vietnam and Indonesia to expand their share
Middle East: steel consumption outlook
Crude steel production rising modestly to 2040
North Africa: steel consumption outlook to 2040
Rising steel output to limit semi imports
Russian Federation National projects: investment shares by sector
Russian exports should increase to close the emerging global supply gap after 2030
US steel trade with Mexico and Canada
US vehicle trade with Mexico and Canada
Brazil steel production and trade
Brazil production and recovery
South America (ex. Brazil) steel demand
Global average crude steel production costs
Crude steel production forecast changes
Apparent steel consumption forecast changes
Steel demand change in 2021 by sector
Share of non-residential construction to grow in medium term
Decline from construction to be balanced by manufacturing sector
Total population and working age population
Urbanised population each decade
Steel demand by sector through 2040
Strong start to 2021
BF-BOF route to remain dominant
Per capita steel consumption (kgs)
Sector-wise growth rates (%)
Pradhan Mantri Awaas Yojana Progress (as of February 2021)
Production and trade flows
Crude steel production by technology
Share of BOF capacity to rise
Declining finished steel imports as % of demand
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. We expect the majors to adopt a hybrid-style set-up, with DRI, EAF, BF and BOF assets on the same site, and the ability to switch the steelmaking route between the lowest cost option taking into account the cost of carbon, scrap, iron ore, coke and others at any given time. Carbon capture storage and usage will play a role in the short-term
Key emission reducing projects in Europe
Capacity additions: Iran to take the lead
Iran: rise in steel output to bode well for exports
US steel demand by sector
Key steelmaking raw materials prices (nominal history, forecast in real terms)
BOF vs EAF crude steel cash costs 2021
Global crude steel costs 2021