On 22 June, 2022, steel rebar futures bottomed below the CNY 4,500-per-tonne mark, a level not seen since last December and now down roughly 15% from their early May peak amid persistently weak demand combined with rising inventories. Lingering worries that a global economic slowdown triggered by an aggressive tightening from major central banks and persistent coronavirus outbreaks in China have dampened manufacturing demand. Adding to the bearish outlook, factories have rebuilt stockpiles following disruptions related to the war in Ukraine. On the flip side, such vast inventories should force big steel players to curb production, which, in turn, should support prices in the medium term.
China steel demand, prices could rebound when Covid lockdown ends
The cost of raw materials (iron ore and coal) are expected to remain high in 2022 because of geopolitical tensions and state-mandated measures to reduce carbon emissions. Fitch Ratings also expected steel prices to remain fairly high this year.
WSA forecast steel demand in China to remain flat in 2022 and potentially increase in 2023 as the Chinese government tries to boost infrastructure investment and stabilise the real estate market.
Global steel demand to grow in 2022 and 2023
Despite the uncertainty caused by the war in Ukraine and lockdown in China, WSA forecast global steel demand to rise in 2022 and 2023.
In 2023, steel demand was forecast to grow 2.2% to 1.88 billion tonnes. However, WSA warned that the projections are subject to high uncertainty.
WSA also expected the war in Ukraine to end in 2022 but the sanctions on Russia to largely remain. Sanctions imposed on Russia have reduced the availability of steel in Europe. According to WSA data, Russia produced 75.6 million tonnes of crude steel in 2021, accounting for 3.9% of global supply.
Steel price forecast
Prior to the Russia-Ukraine crisis, financial analyst Fitch Ratings expected the average HRC steel price to fall to $750 per tonne in 2022 and $535/tonne over 2023 to 2025 in its forecast published at the end of last year.
Due to the heightened uncertainty and volatility in the market, many analysts have refrained from giving long-term steel price projections to 2030.
Post time: Jun-28-2022