Commodity: steel

More than half of the final steel used worldwide was in the construction and infrastructure sectors in 2019, with the mechanical equipment and automotive sectors coming in second and third. Steel is an alloy usually made by combining its main component iron and other elements. The largest steel-producing country today is China, accounting for 57% of the world's steel production by 2020. China will be the first country to produce more than one billion tons of steel by 2020.

After reaching a seven-month high of CNY 3,345 on July 29th, Chinese steel futures fell to CNY 3,190 per tonne as markets reexamined the extent of Chinese fiscal support in response to the slowdown in consumption and the protracted real estate crisis. Beijing did not telegraph significant stimulus measures, but it did state that it will adopt expansionary fiscal and monetary policy to support spending. ArcelorMittal also reduced its outlook and predicted lower steel consumption outside of China as a result of US tariffs on key economies. In order to lessen the high sectoral taxes on steel, the US also exempted pig iron and ferro-alloys from its duties on Brazil, a major supplier. Still, the outlook of lower supply and robust infrastructure spending maintained steel futures 5% higher in the third quarter. Chinese policymakers vowed to erase overcapacity in construction inputs, with Baosteel expecting domestic output to fall by over 50 million tonnes this year due to policy bounds.

The World Steel Association (worldsteel) publishes its Short-Term Outlook (SRO) for 2022 and 2023. Worldsteel estimates that steel demand will grow by 0.4% in 2022, reaching 1,840.2 million tons after a 2.7% percent increase in 2021. In 2023, steel demand will increase by 2.2% to reach 1,881.4 million tons. Current projections are made against the backdrop of the war in Ukraine and are subject to high uncertainty.