China’s domestic steel demand is expected to decline gradually in the years to come from 895 million tonnes in 2019 to 850 million tonnes in 2025, and high steel supply will impose a persistent pressure on the domestic steel market, Li Xinchuang, chief engineer of the China Metallurgical Industry Planning and Research Institute, shared on July 24.
In the next few years, China will evolve its economic growth from speed to quality, and the proportion of tertiary industry will increase to 58% by 2025 while the industrial sector including manufacturing and mining industry will decline to 36% and steel demand, thus, will decrease to around 850 million tonnes by 2025, Li elaborated when presenting at the 11th (2020) China Iron & Steel Development Forum.
By 2019, the proportion of tertiary industry was 53.9% and the industrial sector accounted for 39%, Mysteel Global noted.
For 2020, China’s steel consumption will remain strong, mainly due to “the central government’s efforts to stimulate the economy via a series of measures including taxation and fee reliefs, and government’s capital injection,” he said, warning, though, that the demand may trail off in the long run towards 2025.
As for foreign trade, for the first half of 2020, China’s direct steel exports fell 16.5% on year to 28.7 million tonnes, and exports of steel-consuming industrial products had been affected too, as the COVID-19 disturbed global industrial chains and the trade friction has been ongoing with Chinese steel named in another eight new trade remedy investigations, Li noted.
In contrast to a downtrend in demand, China’s steel supply is very likely to remain high in the next few years, Li projected. Over 2018-January 24 2020, a total of 180 million tonnes/year new steel capacities had been recorded, with some 80 million t/y capacity to come on stream by 2020, he said, on top of the fact that the actual steel output in H1 of 2020 increased 1.4% on year to 499 million tonnes.
Under the present circumstances, China’s steel stocks will hover high this year despite the continuing declines since mid-March, which will take up the cash flows, and as a result, the related enterprises may face the possibility of loss-making as a new normal for this year and onwards, Li predicted, and the negative impact of the pandemic will run beyond this year.