Fitch forecasts steel production growth in China in Q2

International credit rating agency Fitch Ratings predicts that steel production in China will grow in the second quarter of 2024 as demand for steel products from the construction industry recovers. This is stated in the agency’s report, Kallanish reports.

Steel and aluminum production is likely to grow more than cement production, as steel companies intend to increase steel production amid improving profits.

In the first quarter of 2024, steel production in China fell by 1.9% compared to the same period in 2023 – to 256.55 million tons, as adverse weather conditions reduced demand and increased maintenance at steel mills due to low profits.

As commodity prices, particularly for iron ore and coking coal, started to fall in March, steelmakers’ profits gradually recovered. Fitch expects this to contribute to further growth in steel production in the second quarter of 2024.

Fitch forecasts steel demand growth in most regions in 2024. China is expected to see a slight decline in production, while the European steel industry will return to positive dynamics.

At the end of 2023, China produced 1.019 billion tons of steel, up 0.6% compared to 2022. Thus, the downward trend in the country’s steel industry has stopped after two consecutive years of declining production.

Last year, the Chinese authorities did not impose restrictions on steel production in line with their ambitions to reduce CO2 emissions, which contributed to an increase in production and revenue of local steelmakers.