Steel short-term outlook January 2023

A grim 2022 came to an end with macro headwinds still at play. Detractors overpowered drivers as global steel consumption fell 4% year-on-year. The property market crisis and strict Covid lockdowns plagued the Chinese economy. We believe steel markets will witness contrasting halves in 2023. The first half of 2023 will remain primarily subdued due to the ongoing macro challenges and the receding coronavirus infections in China. On the flip side, demand would gradually recover in the second half as Chinese economic activity garners momentum, inflation cools, and supply chain pressures ease. Steel prices bottomed out in December and rose in January on the back of soaring iron ore and metallurgical coal prices. We believe elevated costs and restocking demand will keep prices afloat in the first quarter. Supply will resume echoing demand gains with EU capacity restarts on the anvil, which could pressurise prices. Please read our short-term outlook for more details.