~By SHUBHAM RAI
How will 2021 pan out for the global steel industry that is still reeling under the impact of the ongoing pandemic? World Steel Association’s Short Range Outlook (SRO), released in October, 2020, indicated a drop in steel demand on a global basis of -2.4% between 2019 and 2020. However, in 2021, a recovery is seen in most regions, on a global scale to a level of 1,795 million tonnes (MnT), which is slightly more than the demand seen in 2019. Also, China will, however, remain the largest steel using and producing economy by a long margin, and it will take many years for India to approach the levels of steel use and production seen in China, Edwin Basson, Director General, worldsteel, tells Steel360. Excerpts from an interview:
Q. The year 2020 was severely disrupted by the Covid-19 pandemic. How was the year like for the global steel industry?
A. The pandemic certainly had an impact on the global demand for steel. The impact was different from region to region but, overall, the latest worldsteel Short Range Outlook (SRO), released in October, 2020, indicates a drop in steel demand on a global basis of -2.4% between 2019 and 2020. This drop is very different between different countries and regions. China, which experienced the original outbreak of the pandemic, is expected to grow well and, in steel demand, to show as much as 8% growth in 2020 – mainly because of the quick and rapid recovery of its construction sector, and in the latter part of the year, also in the automotive production sector.
Most of the other countries will show significant decline in steel demand – varying between -10% for Latin America and almost -20% for the Middle East. India is expected to show a decline in steel demand of -20% in 2020.
For 2021, a recovery is seen in most regions, on a global scale to a level of 1,795 million tonnes (MnT), which is slightly more than the demand in 2019.
Q. How do you see the demand for finished steel products in the coming quarters, especially in developed and developing economies?
A. Of the major steel using sectors of construction, automotive and machine building, we expect the construction market to show some decline in 2020, but to recover relatively strongly in 2021. This is also the case for India, with an estimated recovery in the construction sector of 5% in 2021. Car production has seen strong declines in all markets during 2020, but it is expected that most markets will recover strongly in 2021. India, in particular, is expected to show a recovery of almost 20% in the auto sector in 2021. The same is true for the machine building sector, with recovery in India expected to reach almost 8% in 2021.
Q. How is global steel consumption likely to behave in 2021? And what factors could influence this movement?
A. The biggest driver of steel demand is the fact that the global economy is expected to show recovery in 2021, and this will drive steel demand.
Q. As per the latest worldsteel SRO, China’s demand for finished steel has started flattening and contracting. Is India, the second-largest steel producer, likely to play a more dominant role in recouping global demand?
A. Steel demand in India has been severely impacted by the Covid-19 pandemic, and equally the recovery in India is expected to be strong in 2021. China will, however, remain the largest steel using and producing economy by a long margin, and it will take many years for India to approach the levels of steel use and production we see in China. It is also true that India may follow a different economic development path, and will not need to reach the levels of steel demand we see in China and still be successful.
Q. What was the industry scenario in Europe and US? And how does the future look in terms of production, consumption and demand?
A. North America and the European Union (EU) have experienced strong declines in steel demand owing to the Covid-19 pandemic. Both regions experienced demand declines of around -15%. The EU is expected to show stronger recovery than North America, mainly because of more focused recovery support mechanisms in the former.