China's property steel demand could post first decline in 6 years in 2021 from wisepowder's blog

China’s efforts to take the heat out of its property market in 2021 could result in the first decline in steel demand from the sector in six years, according to S&P Global Platts Analytics.Register Now China has tightened its monetary stimulus measures and clamped down on property sector financing since mid-2020. Beijing insists that houses should not be used for speculative purposes. A major plank of its 14th five-year plan is to put more money into the hands of consumers in order to boost domestic consumption, and one way of achieving this is to deleverage the property sector. More cash means more spending, the thinking goes.To get more news about China property market news, you can visit shine news official website.
Platts Analytics presents two scenarios for property steel demand, both of which indicate there will be no growth from the sector this year. (See table below.)

An upper range scenario would see the addition of just 6.07 million mt of steel compared with 2020, marking a 1.9% increase to 328.2 million mt. Platts Analytics’ lower range estimate sees a decrease of 8.68 million mt to 313.4 million mt, marking a 2.7% fall.

The last time steel demand from the property sector declined was in 2015. Property accounts for 30%-35% of China’s total steel consumption.

Based on S&P Global Ratings’ forecast that China’s GDP will grow 7% this year, property new starts and sales in 2021 will be down by 6.4% and 2.8% year on year, respectively.

If China chases GDP growth of 8% or above, property new starts and sales will be up 0.4% and 4.6% on year, according to Platts Analytics.But a best case scenario for steel consumption, of an extra 6.1 million mt in 2021, is negligible compared with the year-on-year increase of almost 23 million mt in 2020. Platts estimates property steel demand in 2020 was 322.1 million mt, up 7.6% from 2019.

The property sector played a vital role in driving up China’s crude steel production in 2020, while keeping steel profit margins robust.

China’s crude steel output rose 5.2% on year, or by 52 million mt, to 1,053 million mt in 2020, breaching 1 billion mt for the first time. This was despite the fact that China was in lockdown for much of the first quarter, with construction wors suspended.China’s steel production capacity will continue to grow in 2021 to 1,285 million mt/year, up from 1,257 million mt/year at the end of 2020. The country’s steel output is forecast to rise by 2.8% on year, or by 29 million mt, to 1,082 million mt in 2021.