Demand for the metal — which is widely viewed as an economic barometer — will drop 2.3% in 2022, bucking an April outlook for a small increase, the group said in research published Wednesday. Consumption in top producer China is set to contract 4% due to the slump in its property sector.
The reversal in the association’s forecast comes during a tumultuous time for the steel sector. Most firms benefited from a boom in prices as coronavirus restrictions eased, only to face slumping demand shortly thereafter as tighter monetary policy and high energy prices hurt growth.
In the European Union, where the energy crunch has been particularly acute, steel use is set to slump both this year and next as rising costs crimp factories and builders. Around a 10th of steel-making capacity there is already offline, according to Jefferies.
Russian consumption could also drop by about 10% next year as sanctions linked to the war in Ukraine crimp its economy. Still, some countries face better prospects, with use in India and US set to grow through next year. World demand is expected to rebound slightly in 2023, the association said.