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Chinese steel demand has likely peaked

China’s top steel mill Baowu Steel says That domestic usage has probably hit a peak and will stabilise at these levels, as absolute growth in the economy offsets changes in the nature of demand. Mr Chen Derong, chairman of China Baowu Steel Group Corp, said “The Chinese economy is moving from high-speed to high-quality growth, but the growth is still certain and the growth rate globally isn’t low. That’ll counter the broader re-balancing away from investment and toward consumption, and lead to stabilised circumstances for an extended period.”

Mr Chen however said “Still, prices remain relatively buoyant, indicating that the economy is doing fine and that domestic demand is resilient.”

His view suggests that consumption is moving in sync with production, which other commentators have forecast will top-out this year before falling in 2019.

Prices in China have surged to a seven-year high in the summer, bolstered by capacity cuts and an environmental crackdown. The risks to demand have since been piling up as China jousts with the US over trade. Economic expansion slowed to 6.5 per cent last quarter, its weakest pace since 2009, while imports of iron ore, the raw material for steel, contracted in the first nine months of the year.
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