China's steel demand is predicted to drop by 3.3% in 2023 and a further 1.7% in 2024, primarily due to a significant decline in construction activity. The China Metallurgical Industry Planning and Research Institute projects consumption of 890 million metric tons in 2023, resulting in a surplus. The steel industry, impacted by the debt-ridden property sector, faces a 4.8% decline in construction steel demand in 2023. Infrastructure sector support is expected in 2024.
China's steel demand is anticipated to face a downturn, with a forecasted decline of 3.3% in 2023 and an additional 1.7% contraction in 2024. Officials from the China Metallurgical Industry Planning and Research Institute (MPI) highlighted these projections at a recent press briefing, attributing the decline to a substantial drop in construction activity.
In the current year, the world's leading steel producer is expected to consume 890 million metric tons, leaving the country with a notable surplus. Despite manufacturing 952.14 million tons of crude steel in the first 11 months of 2023, indicating a 1.5% year-on-year increase, the surplus persists.
China's steel exports have reached 82.66 million tons in 2023, surpassing earlier forecasts and marking the highest volume since 2016. The steel industry in China has encountered significant challenges from the debt-ridden property sector, with a 4.8% decline in demand for construction steel expected in 2023, totaling 506 million tons, compared to the previous year.
Looking ahead to 2024, steel demand in China is projected to contract further to 875 million tons, with construction steel demand experiencing a 4% drop. Despite these challenges, demand from the infrastructure sector is expected to partially offset the decline, supported by the issuance of one trillion yuan of sovereign debt and local government debts in the fourth quarter of 2023.
Xiao Bangguo, vice president of MPI, expressed optimism about the infrastructure sector's support in 2024. Additionally, the steel exports from China may see a slight decrease in 2024, influenced by slowing economic growth overseas.
In conclusion, China's steel industry is navigating challenges as steel demand faces a decline in 2023 and 2024, primarily driven by reduced construction activity. The surplus in steel production, coupled with increased exports and pressures from the debt-ridden property sector, adds complexity. However, there is optimism for the infrastructure sector to provide support in 2024, as the government allocates significant funds. The industry remains attentive to potential shifts in overseas economic growth that could impact steel exports.