China's steel demand is anticipated to decrease by 3.3% in 2023 and further shrink by 1.7% in 2024, owing to a notable slump in construction activities. The country's top steel producer, facing surplus production, foresees a decline in demand due to economic pressures, particularly from the debt-ridden property sector.
China, the global epitome of steel production, faces a challenging outlook for its steel industry. Projections by the China Metallurgical Industry Planning and Research Institute (MPI) paint a concerning picture. A projected 3.3% reduction in steel demand for 2023, coupled with an additional 1.7% decline in 2024, highlights an imminent slowdown in this pivotal sector.
The staggering figures unveiled during a recent MPI press briefing revealed that China, despite being at the zenith of steel production, faces an excessive output scenario. With an estimated consumption of 890 million metric tons in 2023, a surplus looms large, exacerbating existing concerns.
The data further unveils China's formidable steel manufacturing prowess, boasting a substantial production of 952.14 million metric tons in the initial 11 months of 2023, a marginal uptick from the preceding year. Concurrently, the surge in steel exports, reaching a notable 82.66 million tons in 2023, adds complexity to the industry's predicament.
The underlying woes of China's steel landscape find their roots in the beleaguered property sector, significantly affecting the demand for construction steel. An anticipated 4.8% decline in construction steel demand, plummeting to 506 million metric tons in 2023 from the previous year, underscores the sector's distress.
Amidst this decline, a glimmer of hope emerges from the infrastructure sector, poised to partially alleviate the anticipated slump. Xiao Bangguo, vice president of MPI, underscores the projected support from governmental sovereign debt issuance and frontloaded local government debts, expected to buttress the infrastructure domain in 2024.
However, Guan Zhijie, vice general engineer at MPI, forecasts a potential dip in steel exports in 2024, attributed to a deceleration in global economic growth.
China's steel industry stands at a crossroads, navigating through an intricate maze of economic shifts and sectoral dynamics. The forecasts presented by MPI portend a challenging trajectory, with looming contractions in demand amid surplus production. The interplay between governmental support measures and evolving global economic landscapes will likely shape the industry's resilience and future trajectory.