Will the year 2020 witness a plunge in China's Crude Steel Output?
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After a record steel consumption and output in 2019, China's crude steel production is anticipated to register a slight decline next year, according to a new report by the China Metallurgical Industry Planning and Research Institute. China's crude steel output in 2019 and 2020 are expected to reach 988 MnT and 981 MnT, respectively.
Whereas in terms of steel consumption, the same is estimated to hit 886 MnT this year, higher by 7.3% year-on-year, while demand for 2020 is forecasted to be seen at 881 MnT, down 0.6% from the level in 2019.
The institute's president Mr. Li Xinchuang noted that the unexpected steel consumption growth in 2019 can be majorly attributed to an increase in real estate and infrastructure investments, while downstream industries such as machinery, energy, and home appliance also contributed to the growth under the background of a stable growing domestic economy. However, for 2020, the demand from some downstream industries including construction, automobile and shipbuilding is anticipated to fall. Demand from the machinery sector is likely to remain stable, while demand from the energy and home appliance sectors is seen rising.
Following is a breakdown of steel demand outlook for 2019 and 2020 by industry:
| Sector | 2019 | % Change (y-o-y) | 2020 | % Change (y-o-y) |
| Construction | 478 | 11.2% | 475 | -0.6% |
| Machinery | 142 | 1.4% | 142 | 0.0% |
| Automobile | 50 | -7.4% | 48.2 | -3.6% |
| Energy | 34 | 3.0% | 34.5 | 1.5% |
| Ship building | 11.3 | 3.7% | 10 | -11.5% |
| Home appliance | 13.5 | 8.0% | 14 | 3.7% |
| Railways | 5.4 | 5.9% | 5.5 | 1.9% |
| Container | 4.9 | -29.0% | 5 | 2.0% |
Mr.Li called for further "large-scale consolidation" in the world's largest steel market, while pointing to China Baowu Group taking a stake in Maanshan Iron & Steel. In terms of other products, the research body expects iron ore demand in China to reach 1.23 billion tonnes in 2020 and 1.26 billion tonnes in 2019. China brought in 1.06 billion tonnes of iron ore last year. China's pig iron output is expected to contract to 775 MnT in 2020 from 800 MnT forecasted for 2019.
