PSI Blog

The Bigger Picture: Global Metals Market Trends and Outlook, 2023

15 Dec 2022 - Artificial Intelligence, Technology, Sustainability, Energy

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The metals industry has witnessed a rollercoaster year in 2022 with sudden increases and declines in prices and product demand. This was owing to several factors like inflation in the global economy, high-energy prices, increased interest rates, the US monetary tightening, China’s economic deceleration, the ripple effect of Russia’s invasion of Ukraine, supply chain constraint and low demand of metals products. These effects have continued towards the end of 2022. But what would the trend look like for the industry in 2023?

In a forecast by the World Steel Association, steel demand is to grow a further 2.2% in 2023 to 1.88 billion metric tons, according to its Short Range Outlook released in April 14, 2022. The projected outlook for 2023 assumed that the war in Ukraine would have been over and steel production would experience recovery. However, the war in Ukraine has continued, making the outlook for 2023 highly uncertain.

With the deteriorating global macroeconomic conditions, experts fear that this effect will persist into early 2023, representing a downside risk to the metals industry. This could mean a decline in prices, demand and weakening of equity market support. Under difficult market conditions, producers may be compelled to restrain activities. However, this market condition could be turned around if the central banks can successfully gain a control on inflations later in the year 2023, leading to improvements.

In the US for example, metals market outlook for 2023 is expected to be positive, with demand for metals continuing to grow. The US economy is expected to continue to expand, and the demand for metals is expected to remain strong, benefitting from increased infrastructure spending, as well as  increased demand from the automotive and aerospace industries. Additionally, the US metals market is expected to benefit from the continued growth of the renewable energy sector, as well as the increasing demand for electric vehicles.

For the EU and the UK that heavily depend on Russian energy, the case looks glimmer for the coming year, owing to the war in Ukraine.

A steel market outlook by Fitch Ratings makes similar forecasts. According to the projected outlook, there remain material uncertainties around steel demand and economic growth in China and Europe for 2023 but a more positive outlook for the North American, Indian and Brazilian markets. North America, India and Brazil are likely to deliver more predictable earnings in line with or above mid-cycle forecasts. In 2023 steel consumption outside China may outpace the (managed) decline in China with about 35 million tons, mostly due to dynamic growth in India, Southeast Asia and the US. 

Global Steel Trends for 2023

Like any other sector, the metals industry is undergoing massive evolution with digitalization and decarbonization being some of the main drivers of the industry. But what are the specifics of this digitalization and decarbonization trend? We take a closer short-term futuristic look at the industry to outline the top trends that could stand out the most in 2023.

Impact of Decarbonization and CO2 Taxes

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It is difficult to discuss the metals industry trend for 2023 without mentioning the relevance of decarbonizing the sector and its continued impact in the growth of metals production. There is a growing investment and market demand for greener metals products. This means the need for metals production process that consumes less energy, uses more renewable energy sources, reduces CO2 emissions and generally products with less environmental pollution.

During the Steel Market Update (SMU) Steel Summit 2022, in Atlanta Georgia, PSI Metals gathered:

There is an expected heavy investment in decarbonization and an increase in industrial technology spending by 78 percent, showing a 22 percent significant increase.

Chidi Aku, PSI Metals North American Marketing and Document Manager

The need to decarbonize metals production has continued to push the boundaries of innovation and modernization in the industry and this will increase even more in 2023 in the areas of AI, Web3 technologies, and a more intelligent and connected metals industry.

Artificial Intelligence

AI is not new in metals production. However, by 2023, AI will impact metals production industry in a big way. Automation technologies powered by AI will be increasingly used to optimize production processes, resulting in increased efficiency and cost savings. AI-driven industrial robots could also play a major role in increasing the speed and quality of production by automating repetitive tasks.

Furthermore, predictive analytics underpinned by AI can be used to proactively identify and resolve potential production issues, further improving the efficiency and output of metals production.

Web3 Technologies

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Web3 technologies, such as distributed ledgers and smart contracts, are expected to have a significant effect on metals production by 2023. Through distributed ledgers, the traceability of materials used for metal production can be monitored, allowing for improved tracking of raw inputs and better auditing of supply chains. Smart contracts can be used to automate logistics processes, such as order management and payment processing, thereby reducing costs and time to production.

Additionally, Web3 technologies may enable digital platforms to facilitate direct transactions between buyers and sellers, which would further increase the efficiency of metals production.

An Intelligent and Connected Metals Industry

In an intelligent and connected world, the metals industry is expected to be highly automated and data-driven. AI and machine learning technologies can be used to predict and optimize production processes, while connected devices allow for real-time monitoring and analysis of production performance. Additionally, digital platforms may become the primary means of connecting buyers and sellers of metals, creating a more efficient and transparent market.

Finally, web3 technologies such as distributed ledgers and smart contracts may enable data-driven traceability and compliant supply chains, resulting in improved oversight and quality control.

Are you interested in machine learning based predictive quality?

Read more about how to reduce production defects and optimize production!

An Unstable Outlook for an Indispensable Industry

There are uncertainties and high degree of unpredictability surrounding the business outlook for metals production in the coming year due to several factors one of which is rising energy prices.

The outlook, however appears more promising in the North America, India and Brazil when compared to Europe and unprotected markets where increased steel inventories have built up leading to increased competition. Beginning from the second quarter of 2023 going forward, there is an anticipated improvement in the industrial outlook.

This however is subject to review as events influencing the industry unfold.

What is your outlook for the metals industry in 2023?

Veronica Ugwu

Content Marketing Manager, PSI Metals GmbH

Veronica is responsible for creating and executing overall contents to meet strategic plans, communications and PR goals at PSI Metals. She proactively strives to tell the story behind the people and the solutions revolutionizing the metals industry. She is fascinated at the power of contents and how it can be used to deliver insights and tell story about anything. In her free time, Veronica enjoys jogging in the nature.

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