UPDATE 1-Steel demand seen climbing 5.8% this year, to level off in 2022

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LONDON, April 15 (Reuters) - Global steel demand will power ahead by 5.8% this year as economies recover from the COVID-19 pandemic, but growth will retreat next year as the impact of stimulus spending diminishes, the World Steel Association said on Thursday.

The industry group upgraded its 2021 forecast from its October estimate of 4.1% growth as the buoyant economic recovery last year in top steel consumer China was being accompanied by gains elsewhere.

“We are seeing quite a robust recovery in most of the rest of the world,” Director General Edwin Basson said in an online presentation.

The auto sector is rebounding while the construction sector has been hardy throughout the pandemic, with do-it-yourself construction an added boost, Basson said.

“People were home, they had in many cases excess cash and what do they do, they start building new fireplaces, garages and all sorts of things, and all of that turned into quite substantial steel demand.”

The group of producers that accounts for about 85% of global steel output said its upgraded forecast for this year was based on the view that second and third waves of virus infections will stabilise in the second quarter.

Next year, however, growth will moderate with crude steel demand expected to rise by 2.7% to 1.925 billion tonnes.

The global picture has been lopsided, with Chinese demand last year surging by 9.1% while tumbling by 10% in the rest of the world, leading to virtually flat global consumption.

By 2022, however, the tables will turn and a focus by Chinese authorities on more sustainable growth is due to bring steel demand growth down to 1% versus 4.2% in developed economies, the group said.

Going forward, two main challenges for the global steel sector will be curbing carbon emissions and a move towards regionalisation and trade barriers, Basson added. (Reporting by Eric Onstad. Editing by Jane Merriman and David Evans)