Expectations for the Chinese steel market for 2024 may be corrected in a more positive direction amid some slight increase in domestic demand, according to Yuan Wenjiong, CEO of Dao Fortune, sharing his forecast at the Middle East Iron and Steel conference in Dubai this week.
The real estate market, which has been the main steel demand driver in China in previous years, is stagnating and this trend will continue. In 2024, steel demand from the real estate industry may drop by 5-6 percent, resulting in a loss of around 10-12 million mt, “but this is the worst-case scenario,” Yuan Wenjiong said. “Changes in the government policy for real estate will have an accumulative effect,” he added. In general, even though the real estate market will still be under pressure, the situation in 2024 will improve compared to 2023, in particular, amid urban village renovation and the affordable house program.
At the same time, infrastructure development will offset the decline in demand in real estate. In October, China has issued RMB 1 trillion of special treasury bonds “to support infrastructure focused on water conservation facilities,” according to the Dao Fortune CEO. This will result in infrastructure growth of 5-10 percent in the first half of 2024. Next year, steel consumption from infrastructure is expected to increase by 9-10 million mt.
Also, the machinery industry, the second largest steel consuming industry in China after construction, is expected to move forward with an increase by 5-6 percent in 2024, according to Yuan Wenjiong.
According to the latest World Steel Association forecast, total steel demand in China is forecasted to stay stable in 2024, but in reality some slight growth up to 1 percent is possible, which is “still a lot for the whole global market.”
Steel product exports from China are expected to grow to as much as 90 million mt in 2023, adding slightly more than 20 million mt compared to 67.44 million mt in 2022. Except for the slowdown in local steel demand, especially in the first half, “this increase in exports can be explained also by the total reduction in supply volumes from Ukraine and Russia,” he said. The hike in export volumes has been coming at a higher pace from the flat steel market. China’s steel sheet/plate exports totaled 49.05 million mt in the January-October period of the current year, up 36.7 percent year on year, according to the Chinese customs authorities.
As for 2024, Yuan Wenjiong said that in general exports will remain high, even though they may decline from the 2023 high and they are expected to be at around 80 million mt in 2024. This volume is still over 10 million mt higher than the average in in 2018-21.