The steel industry is gearing up to face 2024 with a mix of hope and caution, following a year of reflection on the successes of the 2021-22 biennium. Although 2023 proved to be a challenging period, with the stocks of major producers declining in early autumn, signs of a potential recovery are now evident.
The stock exchanges of leading steel producers have benefited from hopes of inflation easing and less restrictive monetary policies, leading to a modest rebound that has mitigated the losses incurred at the beginning of the year. The start of 2024 has been an uphill climb, but analysts see a positive signal for the steel industry in the recent stress test of the last quarters.
According to Bank of America, the worst seems to be behind us. Analysts anticipate an acceleration in steel production in 2024, suggesting that the headwinds of 2023 should subside with the acceleration of the global economy. After a contraction of 3.9% in 2022, a modest increase of 0.2% is expected in 2023, followed by a more robust +1.9% in 2024 and +1.1% in 2025.
Future Prospects and Challenges.
While China remains the dominant force in the market, producing over a billion tons, its growth rate may experience stability or a slight slowdown. In contrast, India is expected to see growth in the coming years. Forecasts indicate a significant recovery in Europe (+14%) and the United States (+3.7%), especially in terms of prices.
European stocks, battered in 2023, experienced a strengthening towards the end of the year due to positive signals on the macroeconomic front. ArcelorMittal, among the major European and global producers, witnessed a mini-rally in mid-November, even though it confirmed a contraction in shipments in 2023. However, the CEO remains optimistic about the medium to long-term prospects.
Despite signs of a rebound, 2024 may still pose challenges. Analysts warn that prices of raw materials, such as iron ore and coking coal, continue to exert pressure on production costs. Moreover, the industry must carefully manage variables such as demand and procurement costs. Exceptional risk factors, such as geopolitical conflicts, add further uncertainties to the landscape.
In summary, while the outlook is moderately positive, the steel industry must commit to effectively managing challenges, finding the right balance between demand and cost, and navigating through lingering headwinds.
