The current steel market conditions include a slow yet steady recovery. Global steel demand is forecasted to grow again in the year ahead, although high interest rates and other international influences—as well as the United States auto workers’ strike in Detroit, Mich.—continue to factor into fluctuations of demand and prices impacting the steel industry’s future.
The steel industry is an indispensable measuring stick to the global economy. The recent US recession, high inflation rates, and supply chain issues, both domestic and worldwide, are major factors for what is happening in the steel market, although they don’t appear poised to derail the incremental improvements most countries’ steel demand and growth rates experienced through 2023.
Following a 2.3% rebound in 2023, the World Steel Association (worldsteel) forecasts 1.7% growth in global steel demand in 2024, according to its latest Short Range Outlook (SRO) report. While deceleration is expected in China, the world’s leading steel industry, most of the world expects steel demand to grow. Additionally, the International Stainless Steel Forum (worldstainless) projects the global consumption of stainless steel will grow by 3.6% in 2024.
In the US, where the economy’s post-pandemic rebound has run its course, manufacturing activity has slowed, but growth should continue in sectors such as public infrastructure and energy production. After falling by 2.6% in 2022, US steel use bounced back by 1.3% in 2023 and is expected to grow again by 2.5% through 2024.
However, one unforeseen variable that could significantly affect the steel industry for the rest of this year and into 2024 is the ongoing labor dispute between the United Auto Workers (UAW) union and the “Big Three” automakers—Ford, General Motors, and Stellantis.
The longer the strike, the fewer automobiles produced, creating less demand for steel. Steel accounts for more than half the content for an average vehicle, according to the American Iron and Steel Institute, and nearly 15% of US steel domestic shipments go to the automotive industry. A decline in demand for hot-dipped and flat-rolled steel and a reduction in automotive manufacturing steel scrap could cause significant price swings in the market.
Because of the large volume of scrap steel typically coming out of automobile manufacturing, declining production and demand for steel due to the strike could cause a dramatic rise in scrap steel prices. Meanwhile, thousands of tons of unused products remaining on the market lead to falling steel prices. According to a recent report from EUROMETAL, hot-rolled and hot-dipped steel prices began weakening in the weeks leading up to the UAW strike and reached their lowest points since early January 2023.
Worldsteel’s SRO notes that car and light vehicle sales in the US recovered by 8% in 2023 and were projected to increase by an additional 7% in 2024. However, it’s unclear how severely the strike could impact sales, production, and, therefore, steel demand.
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