Steel prices continue to experience downward pressure, driven primarily by waning demand in China, a situation anticipated to persist. Analysts highlight that this trend has been ongoing since the start of the year, and recent figures underscore the extent of the decline.
As of October, steel hot-rolled coil (HRC) futures have plummeted to $519.50 per tonne on the Shanghai Futures Exchange (ShFE), while September’s steel rebar futures closed at $501.24 per tonne. This notable drop aligns with the revised forecasts from research agency BMI, part of Fitch Solutions, which adjusted the 2024 global average steel price projection to $700 per tonne from an earlier estimate of $740 per tonne, citing significant weakness in Chinese demand.
The World Bank’s Commodity Outlook further supports this perspective, projecting a 9 percent decrease in steel prices for 2024, followed by an additional 5 percent drop in 2025. This forecast is reinforced by data from Trading Economics, which indicates a dramatic 34 percent annual decline in home sales by China’s top 100 real estate firms in May, following a 45 percent fall in April. Such figures highlight the persistent struggles within the Chinese property market.
The steel demand outlook remains bleak, with excessive housing inventories casting doubt on the effectiveness of the Chinese government’s house-buying programs. The World Bank predicts continued subdued demand through 2024, exacerbated by a 20 percent year-on-year decline in new home starts in 2023 and a cautious approach to monetary easing in advanced economies, which will likely sustain elevated real interest rates and suppress industrial growth.
Conversely, the Australian Office of the Chief Economist (AOCE) presents a more optimistic view, suggesting a stabilization and gradual increase in global industrial output. The AOCE forecasts nearly 2 percent annual growth in steel production for 2024 and 2025, driven by stimulus-related infrastructure projects. BMI also anticipates a modest 1.2 percent year-on-year increase in steel production for 2024, although it warns of persistent downside risks due to the deteriorating global economic outlook.
Projections for global steel production indicate a potential rise to 2.1 billion tonnes by 2029, buoyed by new capacity developments in Asia, North America, Europe, and the Middle East. However, the World Bank cautions that anticipated increases in iron ore production in Australia and Brazil could exert additional downward pressure on steel prices, despite the forecasted recovery in steel output by 2025.
Demand dynamics remain challenging, with a subdued global economic outlook and sluggish manufacturing sector growth in key markets. Nevertheless, the AOCE projects a 1.4 percent year-on-year increase in global steel consumption for 2024, albeit with continued weakness in China’s property sector.
Amid these global challenges, India’s burgeoning steel demand stands out as a beacon of optimism. Both BMI and the AOCE acknowledge India’s robust economic outlook, underpinned by substantial growth in the manufacturing and construction sectors. Indian government data from late 2023 reveal over 1,700 infrastructure projects, with an estimated completion cost of around $360 billion, poised to drive steel demand significantly.
India is on track to achieve some of the most vigorous growth in steel output globally, with plans to double steel production capacity to 300 million tonnes by 2030. This trajectory positions India as a pivotal player in the global steel market, potentially offsetting some of the demand weaknesses observed in other major economies.