Steel consumption in China will reach 900 million tons in 2024 – forecast

In the first half of the year, the visible consumption of steel in the country decreased by 3.3% y/y

Steel consumption in China is expected to decline to around 900 million tons this year and is likely to remain at this level for the next few years. This was stated by Wang Yingsheng, chief economist of the China Iron and Steel Association (CISA), during the semi-annual Mysteel conference.

According to his forecasts, the country’s total apparent steel consumption in 2024 is unlikely to exceed 910 million tons or even fall below 900 million tons. However, it will definitely remain lower than the 933.4 million tons recorded for 2023.

In January-June of this year, apparent steel consumption in China amounted to 478.7 million tons, down 3.3% year-on-year.

The decline in this indicator also put significant pressure on steel mills: the average profit margin on sales among CISA member plants fell to 0.99% over 5 months, while in 2023 it averaged 1.38%.

As for the steel consuming industries in the country, China’s real estate market remains generally weak, although the decline in this sector has slowed somewhat compared to the previous year, Wang noted.

In addition, the country’s infrastructure investment growth has slowed. Nevertheless, China’s manufacturing industry showed good results in the first half of the year, especially with regard to container production.

According to Wang, the structure of steel consumption and production in China has changed. Thus, the share of steel consumption by the construction sector, including real estate and infrastructure, has been continuously declining since 2021, reaching 52% last year. At the same time, it has increased from the industrial sector – up to 48% in 2023, compared to 42% in 2020.

At the same time, according to S&P Global, steel demand in China recovered in June to a higher level than a year ago. This supported the flat steel market, which was under pressure due to rapid production growth.

According to the sources, it is expected that in the second half of 2024, China’s flat steel production will continue to grow, as it will be supported by the steady demand for steel for the manufacturing industry. This could put pressure on steel markets again.

Some market participants point out that strong exports of manufactured goods have contributed significantly to the strong manufacturing activity. They expect this trend to continue throughout 2024.

As GMK Center reported earlier, in January-June 2024, Chinese steel companies increased steel exports by 24% compared to the same period in 2023, to 53.4 million tons.