Overview
According to forecasts by the China Metallurgical Industry Planning and Research Institute (MPI), China’s steel demand is expected to decrease by 3.3% in 2023 compared to the previous year, and further contract by 1.7% in 2024. These predictions are attributed to a significant decline in construction activity, putting pressure on the world’s largest steel producer.
Current Steel Consumption
In 2022, China’s steel consumption reached 890 million metric tons, as reported by officials at the MPI during a recent press briefing. This represents a drop in demand compared to previous years. However, official data shows that China manufactured 952.14 million tons of crude steel in the first 11 months of 2023, indicating a 1.5% year-on-year increase.
Factors Affecting Steel Demand
The debt-ridden property sector has contributed to the challenges faced by China’s steel industry. Researchers at the MPI stated that demand for construction steel is expected to decrease by 4.8% in 2023, reaching 506 million tons. Furthermore, projections indicate a decline in steel demand in 2024, with an estimated consumption of 875 million tons. The demand for construction steel is predicted to drop by 4% in the coming year.
Government Support and Recovery
To support the infrastructure sector in 2024, Xiao Bangguo, the vice president of MPI, highlighted the plans of issuing one trillion yuan of sovereign debt, along with local government debts that are frontloaded in the fourth quarter of 2023. These measures are expected to provide a much-needed boost to the steel industry and help drive recovery.By analyzing the market data and expert insights, the MPI forecasts offer a glimpse into the future of China’s steel industry, highlighting the challenges and potential for recovery in the coming years.