CONF: China’s steel demand seen plateauing in 2019
“We should neither be too optimistic nor too pessimistic about steel demand (in 2019),” and should consider the impact of both positive and negative factors, Chi told delegates at the conference. In 2018, Chinese steel consumption reached 870 million tonnes, as Mysteel reported.
The slowdown in China’s GDP, investment and GVA growth this year may drag down overall steel demand, Chi admitted. Nonetheless, the huge value of that (albeit reduced) growth will support steel demand and be an even more important factor, he pointed out.
“Even if the country’s GDP growth rate declines to only 6%, that growth will still be equivalent to around Yuan 5.4 trillion ($802.4 billion) on the basis of the current scale of China’s economy,” Chi stated. A decade ago, for China to achieve growth of this magnitude, the economy would have needed to be growing at over 8%, and even just five years ago, such a volume would require a GDP rate of over 7%, he said.
By consumption sector this year, steel required for infrastructure and shipbuilding is expected to continue to increase, while that in real estate development, plus some machinery sectors and white goods manufacturing, may see slowdowns, Chi told delegates. Steel demand from the automobile industry will probably remain stable or decline slightly, he said.
Meanwhile, consumption of certain types of steel products, particularly high-spec and specialty grades, continues to have good potential for growth, thanks to the development of downstream industries, according to Chi.
For example, bridges built with structural steel account for just 1% of all bridges constructed in China, yet in countries such as France, Japan and the United States, the percentages are as high as 85%, 41% and 35% respectively, Chi pointed out.
Over the longer term, China’s steel consumption will likely plateau as was seen with the development of the steel industries in the US and Japan, Chi noted. Over 2020-2025, China’s average crude steel consumption is expected to be hover at around 750-800 million tonnes and in 2025-2030, fluctuate at around 700 million tonnes, plus or minus 5%-10%, according to him.
Written by Olivia Zhang, zhangwd@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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