Steel demand in China to remain stable in 2024 – forecast

Demand for steel in China will remain stable or increase slightly this year. This forecast was voiced by Zhang Longqiang, President of the China Metallurgical Information and Standardization Institute (CMSI), China Daily reports.

According to him, these expectations take into account the country’s GDP growth target of about 5% in 2024, the recovery in demand in the manufacturing industry, as well as the acceleration of fixed asset investment, the promotion of large-scale equipment upgrades and consumer goods trade.

In addition, the decline in demand for steel products used in the real estate sector may ease this year.

According to Zhang, infrastructure investment will remain stable this year with a growth rate of at least 5%.

«Demand for steel in energy and manufacturing industries will keep growing, especially in fields like wind and solar power, nuclear power, new energy vehicles, shipbuilding and marine engineering,» he said.

The expert noted that the implementation of China’s plan to upgrade equipment on a large scale and encourage trade-in deals for consumer goods is expected to create additional demand for steel in the amount of more than 14 million tons. According to him, new urbanization will continue to promote the construction of steel buildings, and the construction of «new infrastructure» will increase consumption of steel products.

Jiang Wei, vice president of the China Iron and Steel Industry Association (CISA), attributed the marked decline in apparent steel consumption to factors such as the lack of effective downstream demand and the slow recovery in demand after the Spring Festival.

«The steel industry still faces challenges like temporary severe imbalances in supply and demand, notable declines in steel prices and rising iron ore prices,» he said.

Due to the difficult market conditions, Chinese steelmakers are actively accelerating the development of new capabilities and promoting high-quality, intelligent and green technologies.

Jiang noted that demand for steel used in the manufacturing sector has grown over the years, accounting for 48% of total steel demand in 2023 (42% in 2020).

«The steel industry has significantly accelerated the adjustment of its product structure, in a bid to meet the increasing demand for steel used in the manufacturing sector, including fields like automobiles, ships and household appliances,» the expert explained.

The CISA vice president believes that more efforts should be made to adjust and optimize supply and create more high value-added products.

At the same time, according to the forecast of Moody’s rating agency, steel demand in India will outstrip demand in China in the short term, SteelOrbis reports. Analysts expect it to grow by 5-7% over the next 12-18 months. Steel demand in India will be supported by GDP growth of 6.6% in FY2024/2025 and 6.2% in the next fiscal year.

However, China’s overcapacity and lower coking coal import costs, analysts say, will pose a challenge to India, especially as local capacity grows, and could negatively impact Indian steel prices.

As GMK Center reported earlier, in the first quarter of 2024, Chinese steelmakers reduced steel production by 1.9% compared to the same period in 2023, to 256.55 million tons. In March, steel production in the country fell by 7.8% y/y – to 88.27 million tons.