Global economic outlook, high energy prices and weak demand subdue metals markets
We expect global basic metals output to increase by 3.6% in 2023, helped by the reopening of the Chinese economy early this year and decreased energy prices.
However, in 2024 basic metals production is forecast to decrease to about 1%. A weaker global economic performance and tighter credit conditions will have a dampening effect on metals and steel demand and prices. Steel output is expected to grow less than 1% next year, as demand from Chinese construction and infrastructure – both critical factors for global steel demand and price development – remains subdued.
Energy prices remain high by historical levels, and we expect them to increase again towards the end of this year, although to a much lesser extent than last winter. Together with higher labour and material costs, this will affect businesses´ margins.
In the medium-term, metals and steel performance will be affected by the extent to which China is successful in pivoting the economy away from investment-led growth through capacity closures. Another factor is the extent to which carbon tariffs can support “greener” production. The emphasis on reducing carbon emissions could help prop up production in less profitable regions, such as Western Europe.