Steel short-term outlook April 2023

World steel production rose by 1.7% in March on a year-on-year basis, with China and India doing the heavy lifting. China’s Q1 2023 GDP growth was promising but mainly driven by consumption while apparent steel demand was suppressed, dragged down by the bearish property market. Owning to volatility in the financial sector and high inflation in the West, consumer spending, construction and investment are depressed in the first half of the year. We anticipate steel demand would gradually recover in the second half with a revival from Chinese real estate, recovery in private investment, and easing supply chain pressures. The capacity restarts across Europe and Asia will benefit steel output, indicating green shoots for consumption, inventory levels and prices. Steel prices in the West continued to ascend in April; expected to cool down in the coming months. We believe bearish steel demand and subdued raw material costs in China will further depress steel prices in the second quarter.