China's steel demand will decrease in 2022

China's steel demand this year is estimated at 954 million tons and in 2022, the figure is 947 million tons, according to data from the China Metallurgical Industry Planning and Research Institute (MPI).

MPI believes that proactive fiscal policy and prudent monetary policy will help the economy in general stabilize. However, being more cautious in real estate investment after the Evergrande incident, uncertainty caused by the pandemic and high raw material prices will reduce steel demand.

According to PMI, steel consumption in construction will decrease slightly in 2022 but in other sectors such as machinery, shipbuilding, and home appliances are expected to increase. However, the overall demand next year will go down.

China's steel industry experienced the first 3 quarters of the year with positive results. High prices bring great profits to businesses in the industry.

However, output is limited because China lacks electricity and strictly adheres to regulations on cutting emissions. Evergrande's crisis also contributed to the drop in steel demand.

According to MPI, China will produce about 1.04 billion tons of crude steel this year compared with 1.065 billion tons last year. Analysts from commodity consulting firm CRU (UK) predict that China's steel output in 2022 will decrease by 1.8% year-on-year.

With steel output falling and scrap usage increasing, PMI said demand for key steelmaking raw materials will also be lower. China's iron ore imports this year will fall 3.4% from last year's record 1.17 billion tonnes and the decline will continue.

NDH