The 27 countries of the European Union plus the United Kingdom will have to wait until 2025 for a proper recovery in steel demand, according to the latest forecast from the World Steel Association (worldsteel).

Worldsteel's Short Range Outlook predicts that EU steel demand will only see a mild increase of 1.5 million tonnes in 2024 compared to the pandemic-impacted year of 2020. It is not until 2025 that the region is expected to see a more significant 5.3% rise in steel demand.

Europe is currently facing the biggest challenges among global regions, the report states. Steel-consuming sectors remain impacted by an unstable geopolitical landscape, high inflation, monetary tightening, and the partial withdrawal of fiscal support. Energy and commodity prices also remain elevated.

"The persistence of these downside factors resulted in a major drop in the region's steel demand in 2023 to the lowest level since the year 2000 and to substantial downward revisions of the forecast for this year," worldsteel says.

European steel demand stood at 136.8 million tonnes in 2023 and is expected to reach 140.7 million tonnes in 2024, reflecting a modest 2.9% increase. Demand is then predicted to rise year-on-year by 5.3% to 148.1 million tonnes in 2025.Germany will remain one of the world's top ten steel-consuming regions, along with China, India, the United States, and others. German steel demand is forecast to increase by 3.2% to 28.9 million tonnes in 2024, followed by a more substantial 10% year-on-year rise to 31.8 million tonnes in 2025.The report notes that the crisis in residential construction activity is expected to continue this year in most major markets, with a recovery not anticipated until 2025. Global manufacturing activity should start improving in 2024, although it remains affected by weak demand, high costs, and tight financing.

In contrast, the automotive industry, which showed a strong recovery in 2023, is expected to see only weak growth in 2024.The green energy transition will remain a key driver of public infrastructure investments, with steel demand for new wind energy installations forecast to triple globally by 2030 compared to the early 2020s. This could provide notable support to overall steel demand in certain regions like Europe.

Worldsteel states that a faster end to inflation and further monetary policy easing could help support steel demand, particularly in the construction sector and through strengthened investment in decarbonization and public infrastructure.