Posted on 14 Dec 2023
The global outlook for steel sector in 2024 is neutral as steel markets will be largely balanced and in a slightly better condition than a year ago, Fitch Ratings says. Fitch expects low single-digit growth in demand in most regions, except for China, where Fitch expects both production and consumption to decline slightly. We expect that manufacturing, auto and infrastructure, especially that linked to the energy transition, will remain key demand drivers, while the construction sector will continue to be affected by high interest rates.
We anticipate that the profitability of steelmakers will rise marginally or remain moderate, aided by improving demand, a slight rise in prices in China, India and Europe, and decreasing raw material prices. Producer margins in China will continue recovering from the extreme lows of 2023.
India is the main growth market for steel and is set to demonstrate a large increase in production and robust margins. The market in Brazil is likely to recover as import pressure declines and demand growth remains positive.
The European steel sector will return to positive growth after a few years of contraction, aided by automotive, industrial production and infrastructure spending amid easing of inflation and energy costs. Nevertheless, structural weakness persists.
Industry consolidation in the US has led to supply discipline and Fitch believes that strategic investments aimed at strengthening operational profiles improve through-the-cycle margins despite some normalisation in steel prices. The major risks are protracted high interest rates in the case of persisting inflation in developed markets, high energy prices and the progress of economic policies in China.
Source:Fitch Ratings
