The World Steel Association in its latest Short Range Outlook for 2022 and 2023 said that steel demand in the developed world will fall by 1.7% and recover by 0.2% in 2022 and 2023 respectively, after recovering by 16.4% in 2021 from the pandemic dip of 12.3%. It said “Steel demand recovery in developed economies saw a major setback in 2022 due to sustained inflation and lasting supply side bottlenecks. The war in Ukraine has provided further impetus to inflation and supply chain issues. In particular, the EU is facing dire economic conditions with high inflation and the energy crisis. Sentiment is dwindling and industrial activities are cooling sharply toward a decline as high energy prices are forcing factory shutdowns.” Steel demand in the EU is expected to contract by 3.5% in 2022. With immediate improvement in the gas supply situation not in sight, steel demand in the EU will continue to contract in 2023 with a significant downside risk in case of harsh winter weather or further disruptions to energy supplies. Financial risks stemming from high public debts and slow growth in China pose further downside risks for the EU. There are also possible long-term consequences for the structure of the economy and hence steel demand if the economic constraints continue at the current level. On the other hand, if the Russia-Ukraine war ends sooner than expected, there is an upside potential. The sustained and strong recovery of the US economy from the pandemic shock is coming to an end as the Fed pursues aggressive interest hikes to contain inflation. Manufacturing activities are expected to cool sharply thanks to the weak economic environment, strong dollar and shift of spending from goods to services. However, the automotive sector is expected to maintain the positive momentum on the back of pent-up demand and easing of supply chain constraints. The construction sector will struggle due to the easing of the housing boom and the delayed recovery of the non-residential sector on the back of rising materials cost and high interest rates. The new Infrastructure Law will however sharply boost infrastructure investment, and rising energy sector investment will support growth in steel demand despite a weakening economy. Overall, US steel demand is not expected to turn into a contraction. The recovery of steel demand in Japan weakened as rising materials cost and labour shortages have led to construction delays. However, with the support of the non-residential construction and machinery sectors, steel demand will continue its moderate recovery in 2022. Growth in the automotive industry with easing of supply chain constraints will allow for a continued recovery of steel demand in 2023. The steel demand outlook for South Korea has worsened and is expected to decline in 2022 due to contracting facility investment and construction. Recovery in 2023 will be led by easing of auto supply chain bottlenecks and an improved outlook for ship deliveries and construction. However, recovery of manufacturing will be limited due to the weak global economy. Both Japan and Korea face downside risks from the worsening global economic outlook as their steel using sectors have a high exposure to exports.