After a years-long property slump that has crushed the billion-ton Chinese steel industry’s biggest source of demand, prospects are getting no better. Prices are tumbling, profits are dwindling, and there’s little relief on offer from a government focused on retooling China’s economy for the long term.Beijing hasn’t delivered a big-bang solution for its real estate woes, nor a boom in infrastructure spending that could keep steel consumption on track.
Other areas are still expanding — for example consumer appliances and shipbuilding — but they’re too small to offset the hit from property. Kallanish sees overall domestic demand falling 1% in 2024.“Steel demand is really poor,” said Wei Ying, an analyst at China Industrial Futures Ltd. “With highly indebted provinces focusing on deleveraging, plus a lack of good projects, infrastructure spending is less than ideal.”The slowdown in demand has triggered a price rout in recent months.
Port inventories of the raw material typically draw toward the middle of the year, but instead they’ve risen every month in 2024 to reach more than 150 million tons. That’ll weigh on iron ore prices, especially with pressure growing for more production cuts at steel mills, including from a government keen to cap emissions.
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