2025-06-17
Lange Research: Steel demand in the first half of the year shows two strong and one weak trend
In the first half of this year, the decision-making departments have accelerated the implementation of more proactive and effective macroeconomic policies. Various incremental policies have continued to exert their effects, and the national economy and total steel demand have continued to show an upward trend. The "three driving forces" of national steel demand show a pattern of "two strong and one weak."
I. Steady increase in industrial production growth, continued strong demand for steel in the manufacturing sector
In the first five months of this year, the added value of major industrial enterprises nationwide increased by 6.3% year-on-year, continuing a steady growth trend; among them, the added value of major industrial enterprises nationwide in May increased by 5.8% year-on-year and 0.61% month-on-month, 0.2 percentage points higher than the year-on-year growth rate in May last year. Broken down into three major categories, manufacturing, one of the three driving forces of steel demand, grew by 6.2%, 0.4 percentage points higher than the overall industrial growth rate; in particular, the added value of equipment manufacturing, which consumes the most steel, increased by 9.0% year-on-year, 3.2 percentage points faster than the overall added value of major industrial enterprises.
Among the major steel-consuming products, from January to May this year, the national automobile production reached 12.757 million units, a year-on-year increase of 11.1%; the output of metal-cutting machine tools reached 330,000 units, an increase of 13.3%; the output of generator sets reached 137.43 million kilowatts, an increase of 25.9%; and the output of robots reached 287,000 sets, an increase of 32%. Other products, such as mechanical equipment, engineering machinery, household appliances, metal containers, and shipbuilding completion, have also seen significant growth, indicating that the demand for steel in the manufacturing sector nationwide has remained strong this year.
From its leading indicators, the China Manufacturing Purchasing Managers' Index (PMI) in May 2025 was 49.5%, up 0.5 percentage points from the previous month; among them, the business activity expectation index was 52.5%, up 0.4 percentage points from the previous month. It is expected that the output value of the manufacturing industry in the first half of this year will still see rapid growth, and the strong demand for steel will not change.
II. Continued expansion of fixed asset investment scale, reflecting the resilience of China's steel demand growth
According to statistics, from January to May 2025, fixed asset investment nationwide (excluding farmers) reached 19.1947 trillion yuan, a year-on-year increase of 3.7%; excluding real estate development investment, fixed asset investment nationwide increased by 7.7%. In May, fixed asset investment nationwide (excluding farmers) increased by 0.05% month-on-month, and the overall investment scale continued to expand.
Among different investment areas, infrastructure investment, which has a relatively high "steel content," increased by 5.6% year-on-year, and manufacturing investment increased by 8.5%, significantly higher than the overall investment growth rate. It is particularly noteworthy that since the beginning of this year, the price of steel nationwide, mainly the price of construction steel, has fallen significantly, which means that the amount of steel consumed per unit (100 million yuan) of fixed asset investment completion is higher than in previous years. In other words, the growth rate of fixed asset investment this year has not fully reflected the actual growth level of consumption due to the increase in the purchasing power of steel. In the first five months of this year, the actual steel consumption and growth level in the field of fixed asset investment are higher than the growth rate of the monetary amount.
III. Bright steel export data, significantly exceeding previous expectations
Since the beginning of this year, despite serious trade protectionism, especially the high tariff policies of the Trump administration in the United States, and the deterioration of the external export environment, due to the continued international market demand and the high quality and low price of Chinese steel, a large scale of steel exports has been maintained, continuing to be a powerful engine driving the growth of China's steel demand. According to the General Administration of Customs, from January to May 2025, the country exported 48.469 million tons of steel, a year-on-year increase of 8.9%; among them, 10.578 million tons of steel were exported in May, a year-on-year increase of 9.8%. Based on this calculation, it is estimated that the national steel export volume in the first half of the year will reach more than 58 million tons, and adding the export of steel billets and forgings, the national crude steel export volume in the first half of the year will exceed 62 million tons; it is estimated that the annual crude steel (steel export equivalent) export volume in 2025 will continue to exceed 100 million tons.
The momentum of indirect steel exports is also strong. According to the General Administration of Customs, in the first five months of 2025, the export value of electromechanical products (RMB) increased by 9.3% year-on-year, accounting for 60% of China's total exports, and the proportion further increased. The export growth rate of some major steel-consuming products is significantly higher than the average growth rate of goods exports, such as household appliances, new energy vehicles, ships and marine engineering equipment, and mechanical equipment. Among important steel-consuming products, automobile exports increased by 6.6% year-on-year in the first five months.
Although trade protectionism remains strong in the first half of this year, especially the high tariff barriers imposed by the Trump administration in the United States are difficult to eliminate in the short term, the most severe period may have passed. Therefore, it is expected that China's steel exports in the first half of the year and even the whole year will still be able to withstand the pressure and achieve a large export volume, or even a good growth rate, whether it is direct steel exports or indirect steel exports. (Original article by Lange expert Chen Kexin, please indicate the source when reprinting)
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