China's Steel Consumption Likely to Decline Further in 2024
[tintuc]
Consumption Forecasts:
2024 Projection: China's apparent steel consumption for 2024 is expected to struggle to exceed 910 million tons and may even drop below 900 million tons. This is a significant decrease from the 933.4 million tons recorded in 2023.GMK Center Analysis: According to GMK Center, steel consumption in China is projected to fall to around 900 million tons this year and is likely to remain at this level for the next few years. Wang Yingsheng, Chief Economist of the China Iron and Steel Association (CISA), presented this outlook at the Mysteel mid-year conference.
H1 2024 Performance:
Decline in Consumption: In the first half of 2024, China's apparent steel consumption reached 478.7 million tons, a 3.3% decline compared to the same period last year. This decline has significantly pressured steel mills, with average profit margins among CISA member mills dropping to nearly zero over the first five months, compared to an average of nearly 1.4% in 2023.
Sector-Specific Trends:
Construction Sector: The real estate market in China remains generally weak, though the rate of decline has slowed somewhat compared to last year.Infrastructure Investment: Growth in the country's infrastructure investment has also decelerated.Manufacturing Sector: However, China's manufacturing sector showed strong performance in the first half of the year, particularly in container production.
Structural Changes in Steel Consumption:
Shift in Sectoral Consumption: The structure of steel consumption and production in China has shifted. The share of steel consumption by the construction sector (including real estate and infrastructure) has been decreasing continuously since 2021, reaching 52% last year. Conversely, the share of steel consumption in the industrial manufacturing sector increased to 48% in 2023, up from 42% in 2020.
Market Recovery and Production Outlook:
Demand Recovery: According to S&P Global, steel demand in China recovered in June, supporting the flat steel market, which had been under pressure due to rapid production growth.Flat Steel Production: Sources indicate that flat steel production in China is expected to continue growing in the second half of 2024, driven by stable steel demand from the manufacturing sector. However, this may again pressure the steel market.
Export Growth:
Increased Exports: In the first half of 2024, Chinese steel companies increased their steel exports by 24% compared to the same period in 2023, reaching 53.4 million tons. Market participants expect this trend of strong export growth to continue, contributing to the recovery of the manufacturing sector.
Summary
China's steel consumption is expected to decline in 2024, possibly falling below 900 million tons, amid weaknesses in the real estate sector and slower infrastructure investment growth. However, strong performance in the manufacturing sector and increased steel exports are providing some support. The structural shift in steel consumption towards the manufacturing sector and a moderate recovery in steel demand in June could influence the market dynamics in the coming months.
Consumption Forecasts:
2024 Projection: China's apparent steel consumption for 2024 is expected to struggle to exceed 910 million tons and may even drop below 900 million tons. This is a significant decrease from the 933.4 million tons recorded in 2023.
GMK Center Analysis: According to GMK Center, steel consumption in China is projected to fall to around 900 million tons this year and is likely to remain at this level for the next few years. Wang Yingsheng, Chief Economist of the China Iron and Steel Association (CISA), presented this outlook at the Mysteel mid-year conference.
H1 2024 Performance:
Decline in Consumption: In the first half of 2024, China's apparent steel consumption reached 478.7 million tons, a 3.3% decline compared to the same period last year. This decline has significantly pressured steel mills, with average profit margins among CISA member mills dropping to nearly zero over the first five months, compared to an average of nearly 1.4% in 2023.
Sector-Specific Trends:
Construction Sector: The real estate market in China remains generally weak, though the rate of decline has slowed somewhat compared to last year.
Infrastructure Investment: Growth in the country's infrastructure investment has also decelerated.
Manufacturing Sector: However, China's manufacturing sector showed strong performance in the first half of the year, particularly in container production.
Structural Changes in Steel Consumption:
Shift in Sectoral Consumption: The structure of steel consumption and production in China has shifted. The share of steel consumption by the construction sector (including real estate and infrastructure) has been decreasing continuously since 2021, reaching 52% last year. Conversely, the share of steel consumption in the industrial manufacturing sector increased to 48% in 2023, up from 42% in 2020.
Market Recovery and Production Outlook:
Demand Recovery: According to S&P Global, steel demand in China recovered in June, supporting the flat steel market, which had been under pressure due to rapid production growth.
Flat Steel Production: Sources indicate that flat steel production in China is expected to continue growing in the second half of 2024, driven by stable steel demand from the manufacturing sector. However, this may again pressure the steel market.
Export Growth:
Increased Exports: In the first half of 2024, Chinese steel companies increased their steel exports by 24% compared to the same period in 2023, reaching 53.4 million tons. Market participants expect this trend of strong export growth to continue, contributing to the recovery of the manufacturing sector.
Summary
China's steel consumption is expected to decline in 2024, possibly falling below 900 million tons, amid weaknesses in the real estate sector and slower infrastructure investment growth. However, strong performance in the manufacturing sector and increased steel exports are providing some support. The structural shift in steel consumption towards the manufacturing sector and a moderate recovery in steel demand in June could influence the market dynamics in the coming months.
