Falling steel consumption in China foreshadows trouble for the global steel industry

Steel consumption in China fell this year for the first time since at least 2000, due to the country's slowdown in economic growth. Total crude steel consumption in China, the world's largest consumer and producer of alloys, fell 1.9 percent year on year to 61.9 million tonnes in August and 0.3 percent over the past 8 months (Jan-Aug) this year. ... In the first 8 months, the consumption of steel products fell by almost 500 million tons.

Perhaps the transition of the Chinese economy to a decline in investment affects consumption, but, most likely, the slowdown in consumption currently has a speculative element, giving the economy and industry more realistic forecasts for an increase in lending. Therefore, the relationship between the growth of domestic steel consumption and economic growth is indirect.

Economic growth is declining by almost 7.5 percent. At the same time, the government supports stimulus measures that have a beneficial effect on the economy. China is likely to reach 826 million tonnes of steel by the end of the year, up 6 percent from last year. Pegged to the conditions of falling steel consumption, the coming times could keep price levels low in the short term. In addition, the inventory shows reserves ranging from 35 million tons to 40 million tons, which does not contribute to an improvement in the price line.