By Clyde Russell
LAUNCESTON, Australia- There are two ways of looking at the 1.7 percent decline in China’s steel output last year.
The first is that it confirms that the world’s largest producer of the key industrial metal is now in an established downtrend, and further weakness is likely this year.
The second is that the steel industry is actually remarkably resilient in the face of major economic challenges, and that output has been essentially flat at extremely strong levels for the past five years.
Both are essentially factual, and reflect the classic glass half-full or half-empty dilemma.
On the half-empty side of the ledger is the fact that China’s steel production peaked at 1.065 billion metric tons in 2020, and has trended lower since then, with 2024 output coming in at 1.005 billion tons.
But another way to look at China’s steel output is that it has been within a 70 million ton range between 2019 and 2024, which is actually quite a stable performance.
Perhaps the best way to characterize China’s steel production is that it likely has peaked, but the decline so far has been gentle, and output remains relatively high despite the well-publicized struggles of the world’s second-biggest economy since the COVID-19 pandemic.
The question then becomes, what is the likely trajectory for China’s steel sector in 2025.
Similar to other markets, the answer remains unclear and subject to factors yet to come into play, chief among them what trade tariffs are put in place by the new administration of US President Donald Trump, who resumed the office on Monday.
It’s also uncertain as to whether 2025 is the year China’s struggling residential property sector gets back on its feet, or whether it remains hostage to weak developer balance sheets and consumer wariness. —Reuters
