MNI: Chinese Steel Demand To Slow In H2

China’s steel demand could grow slightly in 2025 from 2024’s 4.4% drop to 869 million metric tonnes, beating estimates from the China Metallurgical Industry Planning and Research Institute of a 1.5% fall, as robust manufacturing and export demand offsets continued real-estate weakness, local analysts told MNI. 

Strong manufacturing appetite from the government’s old-for-new replacement scheme and equipment upgrades, alongside a rush in export activity had driven steel growth of 3% y/y in the first five months, said Yan Zhini, senior ferrous analyst at Nanhua Futures. However, growth was expected to slow in H2 leading to an overall yearly increase of around 1%, as real estate usage contracts and the front loading effect from the export sector fades, Yan added.

She noted demand from steel-intensive infrastructure projects, such as roads, bridges, and utilities, had also softened as Beijing shifted focus to so-called “new infrastructure,” despite a 5.8% y/y increase in infrastructure spending in the first four months, up from 4.8% in 2024. 

Property-sector weakness is expected to persist, with firms prioritising inventory reduction, weighing further on demand, according to Zhuo Guiqiu, ferrous metal researcher at Jinrui Futures, who pointed to a 10.3% investment decline from January to April.

Steel demand could also contract more than last year’s 4% fall if the U.S. resumes its trade war with China later this year and Beijing fails to provide sufficient stimulus, Zhuo warned.

PRICES

Steel rebar futures prices on the Shanghai Commodity Exchange, which recently dropped below CNY3,000 per tonne for the first time since September last year, could weaken further over the summer as high temperatures and rainfall weigh on construction activity, said Wang Guoqing, director of Lange Steel Network Research Center.

“The unstable international economy, increased uncertainties, rising geopolitical tensions, tariffs, and trade frictions are causing pessimism for prices,” Wang said, adding that steel production, which rose 0.4% y/y to 345 million metric tonnes in the first four months, had added supply-side pressure.

A sharp fall in coking coal prices – Shanxi declined from CNY1430 per tonne in January to CNY1230 by the end of May – has lowered rebar production costs, further weighing on prices, Zhuo said.

“A raw material surplus is significantly weakening cost support for finished steel prices,” Yan concluded.