China steel demand to climb 2% in 2020: CISA

China’s finished steel consumption will increase 2% on the year to 889.8 million mt in 2020, driven by demand from construction sector, according to China Iron & Steel Association estimates released last week.

The total steel consumption rose by 6% on the year in 2019 to 875.3 million mt, according to CISA.

Steel market sources considered a further 2% rise in steel demand in 2020 as decent growth, considering domestic steel demand in 2019 had been strong enough to absorb most of China’s incremental steel production.

CISA warned that China’s steel production would also likely increase further in 2020. China’s crude steel output in 2020 is expected to increase mildly by 2% year on year, keeping supply and demand largely in balance, according to S&P Global Platts.

The construction sector — property and infrastructure combined — will remain the biggest steel demand driver in 2020, consuming 498 million mt of finished steel, up 2% on year, according to CISA. The construction sector’s steel consumption increased 8% on the year in 2019 to 486 million mt.

The association said growth in property new starts will slow in 2020, but infrastructure construction will accelerate and offset the downward pressure on steel demand from weaker property construction.

CISA expects healthy steel demand growth rate in the machinery sector, due to steady demand growth from the petrochemical and construction industry.

However, CISA said steel demand from vehicle, ship and container manufacturing will decline in 2020.

The association predicted China’s passenger car production and sales will decline by 2% in 2020.

A source at a major Chinese steel mill said overcapacity was the main problem for the passenger car market, which would probably take two to three years to resolve.

— Analyst Jing Zhang