Dr. Martin Theuringer, Chairman of the Market Research Committee of the World Steel Association and Managing Director of the German Steel Association, commented on the forecast results, stating that "2024 is undoubtedly a difficult year for global steel demand, as the global manufacturing industry still faces multiple challenges, such as declining household purchasing power, significant monetary tightening, and increasing geopolitical uncertainty. In addition, due to financing difficulties and rising costs, housing construction remains weak, further exacerbating the sluggish demand for steel.
We have significantly lowered the steel demand forecast for most major economies, including China, in 2024, reflecting the continued weakness of the manufacturing industry and the lingering global economic headwinds. We expect a significant decrease in steel demand in China and most major developed economies by 2024. In sharp contrast, India is expected to maintain a strong momentum, with its steel demand expected to increase significantly between 2024 and 2025. In 2024, steel demand in most other major developing economies will rebound, recovering from the slowdown in 2022-2023.
Despite ongoing challenges such as the continued impact of monetary tightening, rising costs, limited affordability, and geopolitical uncertainty, we cautiously and optimistically believe that global steel demand will enter a phase of broad and moderate growth by 2025. The key determining factors for global steel demand forecast from 2025 to 2026 will be the stable development of China's real estate industry, the effectiveness of interest rate adjustments in stimulating private consumption and business investment, and the infrastructure spending trajectory of major economies committed to decarbonization and digital transformation
The sustained downturn in China's real estate industry will affect China's steel demand, which is expected to decline by 3.0% in 2024 and further decrease to 1.0% in 2025. We anticipate that there is a possibility of an upward adjustment in the forecast for 2025. The possibility of the Chinese government intervening and supporting the real economy on a larger scale is increasing, which may boost China's steel demand in 2025.
Driven by strong growth in India and rebound in other major emerging economies, steel demand in developing countries (excluding China) is expected to increase by 3.5% and 4.2% in 2024 and 2025, respectively.
Since 2021, India has become the strongest driving force for steel demand growth, and this trend will continue. We maintain our strong growth forecast for India, expecting steel demand to increase by 8.0% from 2024 to 2025, thanks to sustained growth in the entire steel industry, particularly in infrastructure investment.
After a significant slowdown from 2022 to 2023, steel demand in other emerging economies around the world, such as the Middle East and North Africa region and the ASEAN region, is expected to rebound in 2024.
With the significant reduction in steel demand in major steel consuming economies such as the United States, Japan, South Korea, and Germany, it is expected that steel demand in developed countries will decrease by 2.0% in 2024. However, we are optimistic about 2025 and expect steel demand in developed countries to grow by 1.9%. This recovery depends on the long-awaited rebound in steel demand from the European Union, as well as a moderate recovery from the United States and Japan.
Global manufacturing activity continues to be weak. In our previous forecast, our prediction for a sustained recovery in global manufacturing activity in 2024 did not materialize as scheduled. On the contrary, the industry experienced a recession in the third quarter, which was different from the initial growth and positive signals brought by leading indicators observed in the first few months of this year.
We have noticed that one of the important reasons for the slowdown in the manufacturing industry is the reluctance of households and businesses to invest in durable goods. High costs, economic uncertainty, and a tightening financing environment have led people to adopt a "wait-and-see" attitude and postpone spending decisions. The impact of inflation over the past three years has weakened the purchasing power of many low - and middle-income families, further suppressing people's demand for manufactured goods.
Despite the current challenges, we have reason to be cautiously optimistic about the potential recovery of the global manufacturing industry by 2025. The resilience of the global economy, the relaxation of the financing environment, suppressed demand, and the increase in real income of major economies (the eurozone and Japan) will support the recovery of private consumption and investment, thereby supporting the recovery of global manufacturing activity in 2025.
In 2024, the housing construction industry in most major markets remains weak, continuing to put pressure on steel demand, especially in key regions such as China, the United States, the European Union, Japan, and South Korea. After a period of strong growth driven by historically low interest rates, in 2023, housing construction activity in many major economies sharply declined as central banks significantly increased borrowing costs to cope with soaring inflation. This slowdown continued until 2024, affecting the development of the construction industry and thus reducing steel demand. With the relaxation of financing conditions, it is expected that the residential construction industry (EU, US, and South Korea) will experience substantial recovery starting from 2025.
After achieving double-digit growth in major automobile producing countries in 2023, the automotive industry is expected to experience a significant slowdown in 2024. Due to increasing concerns about inventory growth and slowing sales of pure electric vehicles in major markets, the forecast for light vehicle production is being comprehensively lowered. This shift contrasts sharply with last year's strong performance, highlighting the industry's susceptibility to constantly changing market dynamics and potential future challenges. We expect a moderate increase in global light vehicle production by 2025.
In 2024, strong investment activities in the manufacturing and public infrastructure industries will support global steel demand. The investment of major economies in these areas continues to grow, continuing the momentum since 2023. These strategic investments aim to increase productivity, create employment opportunities, work towards mitigating climate change, and ensure a leading position in future industries. The continuously rising construction costs, labor shortages, and increasing fiscal debt may pose significant challenges to many major economies, thereby limiting the sustained growth of these investment sectors in the short term.
The green transformation of the world economy requires an unprecedented and extremely complex economic transformation, which is one of the main factors behind the strong investment in the public infrastructure industry. By the end of this decade, the demand for steel to expand the global power grid may double to about 20 million tons per year, a significant increase from the current rate of 10 million tons per year. We expect that by the end of this decade, expanding global renewable energy generation capacity and connecting it to demand centers will require an increase of approximately 40 million tons of steel demand, providing significant support for overall steel demand in major developing economies such as China and India, as well as developed economies such as Europe and North America.