China's 2024 Crude Steel Output Dips to Five-Year Low Amid Property Slump
China, the world's largest producer of crude steel, faced a challenging year in 2024, as its production declined by 1.7% year-on-year, reaching a total of 1.005 billion metric tons. This marks the lowest output level in the past five years, a direct result of a prolonged downturn in the country's property market, which has significantly weakened domestic demand for steel.
Steel Output Decline and the Property Market Crisis
The decline in steel production was primarily driven by China's property sector crisis. The real estate market, a major consumer of steel, has been struggling for years, and demand for steel in construction and infrastructure has not bounced back. The downturn in the property sector continues to be a significant drag on steel consumption, contributing to the overall decline in production.
Despite the struggles in the property sector, there was some positive news in December 2024, with output for the month increasing by 11.8% year-on-year, reaching 75.97 million metric tons. However, this was not enough to offset the broader decline in annual production.
Carbon Emission Limits and Impact on Steel Output
China's steel output has been under additional pressure due to the government’s carbon emission goals. As part of its broader environmental strategy, China mandated that there would be zero annual growth in steel production from 2021 onwards. This restriction was put in place to help the country achieve its carbon neutrality targets by 2060, adding a layer of complexity to the sector's recovery.
Steel Consumption Slips Further
According to data from the China Metallurgical Industry Planning and Research Institute, China's steel consumption continued its downward trajectory in 2024, falling by 4.4% year-on-year. This decline highlights the continued weak demand across various sectors, especially the construction and real estate industries that are key consumers of steel.
Despite the weak domestic demand, China's steel exports reached an impressive 110.72 million metric tons in 2024, marking the highest level since 2015. However, this surge in steel exports has led to increased trade tensions, with countries like Japan and India expressing concerns over the influx of cheap Chinese steel, which they argue has been hurting their domestic manufacturers.
Manufacturing Sector and Stimulus Efforts
While the manufacturing sector showed some growth due to aggressive government stimulus measures, it was not enough to fully offset the ongoing challenges faced by the property market. The Chinese government has been pushing to stimulate the economy, but steel consumption remains weak, even as exports have kept production levels somewhat buoyed.
Zhuo Guiqiu, an analyst at Jinrui Futures, stated that while steel consumption remains in a downside cycle, the pace of the decline may slow down in 2025. The government is expected to introduce additional stimulus measures to support demand and stabilize the industry.
Forecast for 2025: Further Decline Expected
Looking ahead, analysts predict that China's steel output for 2025 will fall below the 1 billion metric ton threshold. This would mark the first time since the 2000s that China's steel production has dropped below this critical mark. The ongoing oversupply in the industry, compounded by the weak domestic demand, is likely to result in further output declines in the near future.
While steel exports are expected to remain strong in 2025 due to global demand for Chinese steel, the domestic market will continue to face challenges unless substantial policy measures are introduced to revive demand in key sectors like construction and infrastructure.
