China's Steel Production Surges in 2023 Despite Property Sector Challenges

China's Steel Production Surge in 2023

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In 2023, China's steel production is poised for an increase, the first in three years. This growth comes despite challenges in the domestic property sector, which traditionally accounts for about 35% of the nation's steel demand. The property sector has been hampered by financial issues and declining sales. However, other sectors like vehicle manufacturing and exports are compensating for this slowdown. China, responsible for approximately 55% of global steel production, saw a production increase of 1.4% in the first ten months of 2023 compared to 2022. If this trend continues, the annual output is expected to surpass 1.026 billion metric tons, slightly higher than 2022's 1.01 billion.

The boost in steel output is also supported by rising industrial output and infrastructure investment, with significant growth in machinery, infrastructure, and vehicle sectors, which together account for nearly half of China's steel demand. The export of steel products has seen a substantial increase, rising 35.6% in the first 11 months of 2023 compared to the previous year. This growth in steel production is partly a strategy to bolster economic growth, especially as China recovers from the impacts of its strict zero-COVID-19 policy.

Steel prices have shown recovery recently, with rebar futures in Shanghai picking up in value. Additionally, lower rebar inventories suggest that steel mills might increase output early in the new year, especially if the property sector shows signs of recovery.

Source : Reuters (Reporting by Amy Lv and Dominique Patton)