Chinese Steel Demand to Decelerate in 2020

SEATTLE (Scrap Monster): The Short Range Outlook (SRO) for 2019 and 2020 published by the World Steel Association (worldsteel) predicts slowdown in demand for steel demand in China- the world’s largest steel market.

The country’s steel demand is expected to show high growth in 2019, mainly on account of robust real estate sector activity. Incidentally, the real estate sector of the country reported the strongest performance in five years during the initial seven months of 2019. The SRO predicts 7.8% growth in Chinese steel demand, even in the midst of deceleration of the country’s economy, which is feared to record its lowest GDP growth since 1992.

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The recently declared relaxation to control policies coupled with newly announced construction standard has boosted building steel demand. The steel intensity in new buildings has increased by over 5%, thereby helping to keep construction sector steel demand at elevated levels.

The SRO foresees further weakening of Chinese economy in the later part of 2019 and in 2020. The Chinese administration is unlikely to announce substantial stimulus measures, apart from mild measures such as tax cuts. The auto industry, which has been in a downturn for 13 months in a row, could benefit from these measures. The country’s steel demand is expected to report subdued growth of 1% in 2020, worldsteel SRO noted.

The Chinese annual steel production is forecast to total 900.1 Mt and 909.1 Mt in 2019 and 2020 respectively.