China: Steel output, demand to fall again in 2025

• Trade barriers, tariff hikes to weaken exports
  
  
• Strong realty sector rebound remains unlikely
  
  

Mysteel Global: Both crude steel production and apparent consumption in China are expected to decline in 2025, with output contracting at a faster pace than demand, according to Mysteel's latest forecast for the domestic steel market next year. The drop in steelmakers' production will likely be driven by weakening steel exports, it notes.

Mysteel predicts that China's total crude steel output will fall by 1.3% y-o-y or 13 million tonnes (mnt) to 990 mnt in 2025. This reduction comes amid intensifying anti-dumping measures and tariff hikes targeting Chinese steel products, which may force domestic steelmakers to rein in output.

To illustrate, rising trade barriers and tariff pressures are expected to impact the country's steel exports next year. Meanwhile, China may introduce regulations to address the imbalance of importing high-priced steelmaking raw materials while exporting relatively low-priced finished steel products. These measures may indirectly limit crude steel production and stabilise raw material prices in China, according to the forecast.

Mysteel estimates that China's finished steel exports will decline 9% y-o-y or 9.56 mnt to 96.65 mnt in 2025. This marks a reversal from the expected 17.7% growth this year, which would bring 2024's export total to 106.2 mnt.

With domestic crude steel demand peaking and beginning to decline, the industry's focus is shifting toward high-quality development. Mysteel highlights that a gradual reduction in crude steel output has become a major trend, combining both mills' proactive moves and mandated production cuts.

The forecast warns that if steelmakers keep maintaining high-level production, industry profits will stay concentrated at the raw materials end. This would increase financial strain on steel producers and traders and raise the risk of corporate defaults. To ensure the industry's healthy development, Mysteel recommends further production controls in 2025.

On the demand side, China's apparent crude steel consumption is expected to shed 0.4% or 3.7 mnt y-o-y to 894.2 mnt in 2025.

For the country's largest steel user, the property sector is estimated to enter a prolonged consolidation phase after hitting the bottom, with a V-shaped rebound being unlikely to emerge. In 2025, the country's total area of newly-launched property projects may decline by 7-10% from the previous year. During the first 11 months of this year, China's new construction starts added up to 673.08 million sq m, falling by some 23% y-o-y.

Infrastructure investment will continue to serve as a key counter-cyclical adjustment tool, though its impact may weaken, and the manufacturing sector is expected to sustain its recovery in 2025, albeit at a slower pace.

Overall, steel demand from major downstream industries is forecast to keep declining in 2025, though the pace of decline will slow down.

Mysteel also projects that, for the full year 2024, China's crude steel production will fall by 1.6% (16 mnt) y-o-y to 1.003 billion tonnes (bnt), while apparent steel consumption will drop by 3.6% (33.7 mnt) y-o-y to 897.9 mnt.

In terms of pricing, Mysteel forecasts that in Shanghai's market, the spot price of HRB400E 20 mm dia rebar will average RMB 3,350/tonne (t) ($460/t) during 2025, down by RMB 214/t or 6% from this year's average of RMB 3,564/t. Additionally, the price of Q235 4.75 mm dia hot-rolled coils will average RMB 3,400/t, slipping by RMB 270/t or 7.4% from RMB 3,670/t in 2024, all including the 13% VAT.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.