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of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Free AccessMNI: China 2024 Steel Demand Hinges On Property Investment
China’s steel demand will rebound this year following an estimated 2.2% decline in 2023 should government policies reverse property-sector weakness and new growth drivers expand, however, exports will likely fall following last year's 35.6% increase, local analysts and traders told MNI.
China’s total steel consumption will hit 950 million tonnes in 2024, up 1% year-on-year, with output reaching about 1 billion tonnes, said Wang Guoqing, head of research at Lange Steel Information Research Center. Wang expects the property sector to rebound following last year’s 9.6% decline due to government support aimed at stabilising the industry, which should drive a slight increase in steel demand. Beijing’s domestic-market focus should also boost appetite among machinery, automobile, and home-appliance manufacturers, she added.
Beijing and Shanghai have recently relaxed purchasing regulations, while the People’s Bank of China expanded Pledged Supplementary Lending facility – aimed at urban renewal projects – could generate about CNY3 trillion investment over five years. (See MNI: PBOC To Offer More Targeted Tools, Expand Balance Sheet)
REBOUND DOUBTS
Commodity research firm Mysteel, however, believes demand could fall 0.3% this year as the property market fails to improve over the short-term.
A Beijing steel trader told MNI the effectiveness of China’s policies will determine consumption and this will take time to judge. The trader doubted whether steel prices would recover in 2024, as authorities seemed reluctant to implement output controls and mills were unwilling to cut production. Oversupply would offset any demand increase, he added.
China produced 1.02 billion tonnes of crude steel in 2023, roughly flat from 2022, according to official data released last week. (See MNI: Cap Seen Boosting China Steel Demand In Q3) The domestic steel industry PMI fell 2.2 percentage points m/m in December to 46.0, down from January 2023’s high of 50.0, according to the China Logistics Information Center. The price of Shanghai rebar futures, meanwhile, fell to CNY3,881 per tonne this week, down from CNY3,949 at the start of January.
EXPORT DECLINE
China’s output and fall in domestic consumption last year led steel exports to increase 36% to 90.2 million tonnes – its highest level since 2014. Wang expects this to fall to 80.0 million tonnes this year, as importing countries impose anti-dumping measures and ramp up production.
Speaking at a recent conference, He Wenbo, executive chairman at the China Iron and Steel Industry Association, noted overseas consumption would likely slow causing exports to fall.
The trader, however, argued exports would remain solid if domestic demand stays soft.
To read the full story
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.