Posted on 12 Jul 2023
China's apparent consumption of crude steel is expected to fall by 27.8 million tonnes or 5.7% on year to 459.8 million tonnes in the second half of this year, Mysteel predicts in its newly-published forecast for the domestic steel market.
Among the major steel-consuming sectors, the domestic property market is unlikely to see any significant recovery in the second half, as limited incomes among consumers and increased default risks of real estate enterprises are causing property sales to remain under pressure. Market participants suggest that lower mortgage rates may be one effective measure to boost property sales in the coming term, however.
Steel consumption in the construction machinery industry may remain weak during the current July-December half, as machinery sales in the domestic market are still struggling with falling demand. Similarly, machinery exports may continue growing in the second half year but the volume cannot offset the serious decline in domestic market sales, according to the report.
The growth in output of white goods may slow during this half, as domestic demand may shrink following the online and offline promotions carried out in the middle of the year, the report warns. Here again, business abroad cannot make up the difference as export volumes are seen beginning to fall from this month with the impact of persistent global inflation and deflationary policies in Europe and the United States.
Public investment in infrastructure is expected to keep stable in the second half year, which may help to stabilize economic growth and lend some support to domestic steel demand, the report suggests.
Over January-May, the growth in China's infrastructure investment slowed to 7.5% on year, still a high level but lower somewhat compared with the first four months of this year, Mysteel Global learned.
For the second half of this year, China's auto output and sales may decrease on year, due to the higher base of auto sales during the same period last year, as central and local governments had initiated a series of measures to drive auto sales, including halving the purchase tax.
However, steel usage in the auto sector may increase in H2 thanks to a forecast rise in sales of commercial vehicles with the recovery of the logistics industry. The average amount of steel used in one commercial vehicle is about four times that used in a passenger car, Mysteel Global noted.
Steel demand from the shipbuilding sector may keep firm during this half, as new ship orders may increase thanks to old-for-new "swap" arrangements aimed at scrapping heavily polluting vessels, the report said.
As for steel supply, should the central government demand that total crude steel production this year not exceed that of year, output during July-December could be lower by 14.56 million tonnes or 2.8% from the same period last year, the report notes.
Source:Mysteel Global
