Chinese downturn to subdue 2025 steel market recovery

An upturn in EU demand and modest recoveries in the United States and Japan will provide limited upward pressure to global steel prices in 2025.?

In its latest Short Range Outlook report, worldsteel’s demand forecast for 2024 has been revised down. With the final quarter of 2024 remaining, worldsteel now expects that global steel demand will drop by 0.9% for the year as a whole, to 1.75 billion tonnes. In April, it had forecast 1.7% growth, to 1.79bn tonnes. A 3% decline in China (to 868.8 million tonnes) is the key influence.??

However, worldsteel expects what it called a “broad-based recovery” in the world, excluding China, in 2025. It forecasts that global steel demand will rise by 1.2% next year, to 1.77bn tonnes. This is down from its previous forecast of a 1.2% rise to 1.82bn tonnes.?

• This content first appeared in the October edition of MEPS's International Steel Review. The monthly report features steel prices, price indices, market commentaries and forecasts from across the region. Contact MEPS for details of how to subscribe.

MEPS International’s World Average price for hot rolled coil declined by over 25% year-to-date in October amid continued weak demand. Many market participants in the countries assessed for the International Steel Review have pushed their hopes of increased demand further into 2025.?

The US Federal Reserve cut interest rates by 0.5 percentage points in October. The ECB cut its rates by 0.25 percentage points in September and October, meanwhile. These actions will take time to influence steel demand. Nevertheless, after a period of elevated interest rates – implemented to subdue inflation – the cuts indicate a renewed focus on fiscal easing and economic growth.??

2025 growth outlook?

According to worldsteel, next year’s demand uptick will be driven by increases of 0.7% in Asia and Oceana (to 1.25bn tonnes); 3.5% in the EU and United Kingdom (to 141.4m tonnes); 1.6% in the US, Canada and Mexico (to 133.4m tonnes); 3.3% in the Middle East (to 58.7m tonnes); and 4.8% in both Central and South America (to 47.8m tonnes), and Africa (to 38.9m tonnes).?

India, the world’s fastest growing major economy, underpins much of the projected growth. Steel demand in the country is forecast to rise by 8% this year (to 143.4m tonnes) and by 8.5% in 2025.?

Meanwhile, China’s consumption is forecast to decline by a further 1% to 860.1m tonnes in 2025. This will continue to push Chinese mills to seek overseas opportunities, exerting downward pressure on steel prices in export markets. In the first nine months of 2024, China’s steel exports were up 21.2% year-on-year at 80.7m tonnes.?

The effect of the Chinese government’s efforts to stimulate economic growth has been reflected in MEPS steel price data in recent months. Significant steel price declines in China were followed by an October bounce back following the announcement of new stimulus measures ahead of the Golden Week holiday (October 1-7). MEPS’s Asia market respondents are uncertain whether the positive sentiment brought by these measures – targeting improvement in China’s real estate sector – will be sustainable.?

Overcapacity pressures?

Market participants in Europe, the US and parts of Asia say that steelmakers are now starting to implement capacity cuts to align supply with reduced levels of demand. Nevertheless, the European Steel Association (Eurofer) is calling for increased trade defence measures to mitigate the downward price pressure exerted by low-cost imports.?

Eurofer referenced Global Forum on Steel Overcapacity (GFSEC) data which shows that global excess steel capacity will reach 630 million tonnes by 2026. This is five times higher than the EU’s steel production in 2023, it said.?

Consequently, without a significant uptick in the demand outlook for 2025, any rise in steel prices will increasingly rely on supply restrictions.??