Contradictory views on China’s steel output. But only time will tell if production will rise or fall
Reports by the Australian government and other economic analysts that Chinese steel production has peaked are at odds with the expectations by local observers that the government’s infrastructure push will underpin demand
A new Australian government report predicting China’s steel production will peak this year and start to decline over the next two years is at odds with expectations in the mainland that output will actually increase because of the government’s renewed focus on infrastructure investments to stabilise economic growth.
Steel output in China, by far the world’s largest steel producer, is “forecast to peak” at 886 million tonnes this year, but will shrink over the period to 2020 to 842 million tonnes, according to a quarterly report on resources and energy released by Australia’s Department of Industry, Innovation and Science on Tuesday.
The department also estimated Chinese steel consumption would slump by 1.9 per cent in 2019 and 2.3 per cent in 2020 after increasing 2.8 per cent this year.
The report said the reversal of the mainland production trend will be driven by a series of government policies, including stricter environmental regulation, reforms that will shutter some loss-making production capacity, and reduction in debt at state-owned enterprises.
If the intensity of environmental regulation is the same as last year, steel production this autumn and winter is expected to be higher than the same period last year
Canberra’s forecast matched predictions by other organisations.