Fitch forecasts an increase in demand for steel in most regions in 2024

A slight decrease in production is expected in China, and European steel industry will return to positive dynamics

The global outlook for the steel sector in 2024 remains neutral. This is the assessment of the international rating agency Fitch Ratings in its new review.

According to the review, steel markets will be largely balanced and in a slightly better position than in 2023. Fitch expects low single-digit demand growth in most regions, with the exception of China, where both production and consumption of steel products are forecast to decline slightly.

The key drivers of steel demand, according to analysts, will be manufacturing, automotive and infrastructure, especially related to the energy transition. At the same time, the construction industry will continue to be affected by high interest rates next year.

Fitch predicts that the European steel sector will return to positive growth in 2024 after several years of decline. This will be driven by spending on automotive, industrial production and infrastructure amid declining inflation and energy prices. However, structural weaknesses in the industry will continue to persist.

According to analysts, India, which is the main sales market for steel, should demonstrate significant growth in production and stable margins next year. The Brazilian market is likely to recover as import pressure eases and demand growth remains positive.

Fitch predicts that steelmakers’ profitability will increase slightly or remain moderate due to improved demand, slight price increases in China, India and Europe, and lower raw material prices. Chinese producers’ margins will continue to recover from the extreme lows of 2023.

The main risks for the global steel industry are the continued high interest rates if inflation in developed markets persists, high energy prices and the progress of economic policy in China.

As GMK Center reported earlier, Fitch Ratings noted that the fundamentals of US steel companies remain resilient, according to its outlook for 2024. As noted, industry consolidation has led to supply discipline. Analysts believe that strategic investments aimed at strengthening operating profiles will lead to margin improvement throughout the cycle.