China’s steel demand to fall by 1.7% in 2024

Demand for steel in China will decline by 3.3% this year compared to 2022, and in 2024 it will decrease by 1.7% y/y. This forecast was made by the China Metallurgical Industry Planning and Research Institute (MPI), Reuters reports.

The decline in demand for steel will be weighed down by a significant drop in construction activity, the state planner said.

According to MPI, steel consumption in China will reach 890 million tons in 2030, leading to a significant surplus in the market.

In the first 11 months of 2023, steel production in the country amounted to 952.14 million tons, up 1.5% year-on-year. In 2023, China has already exported 82.66 million tons of steel products, the highest since 2016 and exceeding previous forecasts.

At the same time, the country’s steel industry is under significant pressure from the debt-ridden real estate sector. According to MPI forecasts, the demand for construction steel in 2023 will decrease by 4.8% y/y – to 506 million tons, in 2024 – by 4% y/y.

Demand from the infrastructure sector will help partially offset the decline in the real estate market, researchers believe.

«The issuance of RMB 1 trillion worth of government debt, as well as local government debt to be issued in the fourth quarter of 2023, will support the infrastructure sector in 2024,» said Xiao Bangguo, Vice President of MPI.

As GMK Center reported earlier, China will accelerate decommissioning obsolete steel capacity, and will continue to encourage the development of electric arc furnace (EAF) steel production to reduce carbon emissions. According to the plan, by 2025 the share of the latter should be 15% of the total volume.