China Steel Association expects dynamic adaptation of steel supply and demand to be improved in 2024

On January 12, the China Iron and Steel Association released a special report on the supply and demand situation of the steel market in 2023 and the development trend in 2024 at the sixth general meeting of the sixth session.
    

According to the analysis of the report, with the active promotion of various policies, China's economy will continue to pick up and improve in 2024. From the perspective of downstream demand, as the construction of the "three major projects" continues to advance, it will benefit the real estate market, but it will take time for market confidence to recover. It is expected that various indicators of real estate will continue to decline and the rate of decline will narrow; infrastructure investment will continue to grow, and the scale of special bonds will remain high, which will still be an important support for stable growth. However, local governments' financial pressure will slow down and the growth, overall manufacturing investment and export markets are under pressure, automobiles, home appliances, and ships maintain a growth trend, and the main steel sub-industry in the machinery industry may continue to decline.

According to the report, the demand for steel in China's major downstream industries will continue to diverge in 2024, with an increase in the reduction. Among them, the demand for steel for construction and machinery has declined, and the demand for steel for automobiles, home appliances, ships, containers, and energy has increased. Overall, China's steel demand will decline slightly by 1% year-on-year in 2024. In the future, the iron and steel industry urgently needs to further accelerate the pace of product structure adjustment and achieve a higher level of dynamic balance between steel supply and demand.

In 2024, China's overall demand for construction steel will fall by about 2% year-on-year.

From the perspective of the real estate industry, in 2024, resolving real estate risks is still the main line of policy, and there is room for force at both ends of supply and demand. Supply side, enterprise financial support policy is expected to continue to refine the implementation, local land auction rules or continue to relax, "guarantee building" funds and supporting measures are expected to further follow up. On the demand side, first-tier cities implement policies according to districts and needs, optimize the identification standards of ordinary residential buildings, reduce transaction taxes, etc.; core second-tier cities are expected to completely abolish purchase restrictions; more cities or through the issuance of housing subsidies and other ways to promote the release of housing demand. After more than two years of market overshoot in the real estate industry, favorable factors are increasing with the coordinated efforts of policies at both ends of supply and demand, and the decline in the real estate market is expected to narrow further in 2024. Real estate investment is expected to fall by 6% in 2024, new construction area by 10%, and sales area by 5% to about 1.15 billion square meters.

From the perspective of infrastructure, in 2024, my country will thoroughly implement the "Outline for the Construction of a Transportation Power" and the "National Comprehensive Three-dimensional Transportation Network Planning Outline", vigorously implement the "Five-Year Action Plan for Accelerating the Construction of a Transportation Power (2023-2027)", and implement the "Fourteenth Five-Year Plan" A series of planning tasks, strengthening new and old infrastructure investment, especially the issuance of 1 trillion yuan special national debt and the advance of local debt limit will fully guarantee the reasonable expenditure level, it is conducive to infrastructure construction. Infrastructure investment growth is expected to remain resilient in 2024, with growth rates or a decline.

In 2024, the decline in the real estate industry narrowed, steel demand is expected to maintain a downward trend, infrastructure steel demand will maintain a small growth. Overall, in 2024, steel demand in the construction industry will be about 0.47 billion tons, down about 2% year-on-year. According to the "14th Five-Year Plan for the Steel Structure Industry" and the Vision 2035 "issued by the China Steel Structure Association, by the end of 2025, China's steel structure consumption will reach about 0.14 billion tons; by 2035, China's steel structure consumption will reach more than 0.2 billion tons per year. The steel structure industry still has a large space for development, which will be one of the growth points of steel consumption in the construction industry in the future, which is good for the medium and heavy plate and section steel market.

In 2024, China's demand for steel for machinery will decrease by about 2% year-on-year.

In 2024, the overall economic operation of the machinery industry will continue to be stable and positive, and the growth rate of major economic indicators will be basically synchronized with the national industry. The downward pressure on the external demand market continues to be detrimental to the release of steel demand due to multiple factors such as the trade squeeze formed by the repair of global supply chains and the slowdown in recovery in developed economies.

Electrical and electrical industry. In 2023, the electrical and electrical industry has always been in the production and sales of two prosperous situation. Coal power, nuclear power, hydropower and other equipment enterprises are full of orders, wind power, photovoltaic, pumped storage and other new energy fields continue to grow at a high speed, and the power transmission and transformation industry is developing steadily. It is expected that in 2024, the operating income of the electrical and electrical industry will increase by 8% year-on-year, and the profit will increase by about 6%.

heavy machinery industry. The operating income of the heavy machinery industry is expected to grow by about 2% in 2023. In 2024, the economic operation of the heavy machinery industry will improve as a whole, and it is expected to show a trend of "low before and high after", and the annual operating income growth rate will be more than 2%.

Construction machinery industry. Affected by the real estate downturn and other factors, the construction machinery industry has not yet got rid of the downward channel, the later production and sales pressure will continue. In 2023, the operation of the construction machinery industry showed a trend of "high before and low after. In 2024, with the continuous expansion of the market scale of new products such as aerial vehicles and the emergence of new growth points, the operation situation of the construction machinery industry will gradually improve.

Machine tool industry. In 2023, the operation of the machine tool industry was under tremendous pressure. The overall market demand was insufficient, and exports were better than domestic sales. Overall, it was the same as in 2022 or slightly increased. In 2024, the machine tool industry will show a smooth recovery.

Agricultural machinery industry. The switching of national four emission standards has had a significant impact on the agricultural machinery market in the past two years. At the beginning of 2023, after a short inventory replenishment cycle, agricultural machinery production slowed down significantly and showed an overall downward trend. In the context of ensuring food security and improving the level of agricultural mechanization, the operation of the agricultural machinery industry is expected to improve in 2024.

General machinery industry. Benefiting from the development of emerging fields such as robotics, intelligent manufacturing, and automation, the scale of the general machinery industry continues to expand. It is expected that the industry production and main operating indicators will increase in 2024, and the industry scale will reach hundreds of billions of dollars.

Taken together, the demand for steel in the machinery industry is expected to be 0.191 billion tons in 2024, a decrease of about 2% year-on-year.

In 2024, China's automotive steel demand will increase by about 3% year-on-year.

In 2024, in terms of macro policies, my country will unswervingly promote the development of intelligent networked new energy vehicles and continue to benefit the new energy vehicle market. However, the uncertainty of the global trade environment, geopolitical tensions and fluctuations in trade policies will give my country's automobiles. Exports bring certain uncertainty, and the "price war" in the domestic automobile industry also has a certain impact on market confidence.

Overall, in 2024, the automotive industry is expected to achieve steady growth, the growth rate may have a certain decline, an increase of about 3% year-on-year. In terms of vehicle types, under the support of the demand for upgrading, the new energy vehicle market and the export market, the production and sales of passenger cars are expected to achieve a slight increase, with a year-on-year increase of about 3%; in terms of commercial vehicles, the growth of investment in infrastructure construction, logistics and business Driven by active activities, it is expected to continue to grow, with an increase of about 5%. In terms of energy types, the output of new energy vehicles is expected to increase by about 20% year-on-year, and the output of traditional energy vehicles will decline slightly; the export volume of automobiles will increase by about 15% year-on-year.

In short, in 2024, my country's automobile production and sales are expected to maintain growth, with total sales reaching 31 million vehicles, an increase of about 3% year-on-year. Steel consumption in the automotive industry is generally consistent with the trend of automobile production. Combined with changes in the scale and structure of automobile production, steel consumption in the automotive industry is expected to be about 61 million tons in 2024, an increase of about 3% year-on-year.

In 2024, China's demand for steel for home appliances will increase by about 2% year-on-year.

In 2024, the domestic market of my country's home appliance industry will be dominated by renewal demand, and the overall stability will remain stable; the export market is affected by the international economic situation and geopolitical factors, and there is greater uncertainty. The home appliance industry is expected to grow slightly throughout the year.

In the domestic market, it will take time for China's real estate market to stabilize, and the demand related to the industrial chain will weaken. In the face of the stock housing market, some enterprises choose to actively explore the product direction of space integration, scene functionalization and environmental comfort. China's mature home appliance category penetration rate is high, with the home appliance industry's cyclical attributes continue to weaken, the industry demand more from the stock update, the total demand has a certain support.

In terms of overseas markets, on the one hand, the conflict between Russia and Ukraine has reached a deadlock and political conflicts have occurred frequently, and the impact on the economy has expanded from local inflation to many basic livelihood and trade areas, and the recovery of the world economy is under pressure; on the other hand, commodity consumption in Europe, the United States and other regions Demand has been repaired to a certain extent, and demand in Russia and Central and East Africa will continue to grow. In 2024, demand for overseas home appliances is expected to grow slightly.

Overall, the demand for steel in the home appliance industry is expected to increase slightly in 2024, about 16.2 million tons, an increase of about 2% year-on-year.

In 2024, China's demand for marine steel will increase by about 3% year-on-year.

Starting in 2021, the shipbuilding industry has entered a new growth cycle. In 2023, China's hand-held ship orders rebounded to a nearly five-year high, and most shipping companies have scheduled orders until after 2027. It is expected that by 2030, China's shipbuilding industry will maintain a steady growth trend. In 2024, the world economy may face greater downward pressure, and the uncertainty of the international shipping and shipbuilding market will increase. However, the introduction of the 2023 International Maritime Organization Ship Greenhouse Gas Emission Reduction Strategy will promote the global shipping industry and shipbuilding industry to accelerate carbon reduction. The process of emission reduction will have a positive effect on the new shipbuilding market.

It is expected that in 2024, my country's shipbuilding industry will continue a steady and positive development trend. Shipbuilding completions and hand-held orders will increase year-on-year, and the number of new orders will basically be flat or increase slightly. Emerging markets such as new energy power vessels, far-reaching sea aquaculture equipment and offshore wind power will maintain rapid growth.

In 2024, the shipbuilding industry will maintain steady growth, which will drive the steady growth of marine steel consumption; at the same time, the demand for ship repair, marine ranching, and offshore wind power is expected to maintain certain growth. It is estimated that the annual steel consumption of China's shipbuilding industry is about 17.8 million tons, an increase of about 3% over the same period last year.

In 2024, China's container steel demand will increase by about 2% year-on-year.

From the perspective of the external demand environment, in 2024, although the external uncertainty has increased, the normal replacement of containers in use and some large container ships manufactured in the early stage will be delivered one after another, which will support the scale of container demand.

From a domestic point of view, China has accelerated the construction of an internal circulation market system, and the proportion of domestic trade containerization has gradually increased. In the face of uncertain international market, the domestic market demand is still relatively strong. Major coastal container ports and shipping companies pay more attention to domestic trade container transportation, and the active promotion of "multimodal transport" has further increased the containerization rate of domestic trade cargo. At the same time, the continuous advancement of transportation structure adjustments such as "transfer rail" and "scattered to gather" will bring new markets for containers, and the demand for domestic trade containers will increase. In addition, the construction of land logistics channels along the border in China is advancing rapidly. The state promotes the construction of a network of "two corridors and ten corridors" international logistics channels, and strengthens the radiation capacity of diversified international logistics channels serving the "Belt and Road", which will also drive the release of some container demand.

To sum up, in 2024, China's container production is expected to pick up slightly, the total amount will still be at a historically low level, the next 1 to 2 years will gradually return to the normal level of about 3 million TEUs per year. It is estimated that the steel demand of the container industry will increase slightly with the container production in 2024, and the total demand will be about 4.5 million tons, which will increase by about 2% year-on-year.

In 2024, China's railway steel demand will drop by about 2% year-on-year.

According to the construction progress of railway projects under construction, the start of new projects and the goals of the National Railway Group's master plan, in 2024, the scale of national railway investment will maintain steady growth, and high-speed railways will continue to usher in the peak period of construction. Yanyu high-speed railway, Changan high-speed railway, Weishu high-speed railway, Hewu high-speed railway, Shaoyong high-speed railway, Lu'an railway and other railways will be fully started; tongji, Yanyi, Dali Pan, Fuhuang, Huzha Hangzhou, Wuhan hub direct line and other projects have not made obvious progress in the early stage of 2023, and it is expected that there will be a major breakthrough by 2024.

According to the expected scale of railway investment and construction in 2024 and the approval and commencement of the project, it is estimated that the demand for railway steel in China will be about 4 million tons in 2024, down about 2% from the same period last year.

In 2024, China's oil and gas pipeline steel demand will increase by 2% year-on-year.

The 2024 National Energy Work Conference emphasized that energy work must adhere to the general tone of seeking progress while maintaining stability, implement the new development concept completely, accurately and comprehensively, accelerate the construction of a new development pattern, coordinate high-quality development and high-level security, and further promote the energy revolution. Build a new energy system and a new power system, strengthen the construction of an energy production, supply, storage and marketing system, and promote high-quality energy development to a new level at a new historical starting point. In 2024, it is expected that the output of raw coal will continue to maintain a high level, and the role of coal as a guarantee will be better brought into play; crude oil production will be stabilized at 0.2 billion tons, and natural gas will continue to maintain a good momentum of increasing production. Focus on the implementation of the "double carbon" target task, accelerate the energy green low-carbon transformation, is expected to 2024 national wind power photovoltaic new installed capacity of about 0.2 billion kilowatts. The nuclear power project will be completed and put into operation 4 units, with an additional installed capacity of about 5 million kilowatts.

It is expected that the construction of oil and gas pipelines will continue to maintain a steady growth trend in 2024. The demand for pipeline steel will be about 5.1 million tons, an increase of 2% year-on-year, and the growth rate will be narrower than in 2023.

In 2024, China's electrical steel demand will increase by 3% year-on-year.

At present, the global power grid is facing the four tests of tight supply, aging system, mismatch of construction time between new energy and supporting power grid lines, and great pressure of new energy grid connection. In the future, the investment planning and landing plan of overseas key regions and national power grid will become an important catalytic force, with broad export prospects. The leading domestic enterprises that actively deployed to sea in the early stage have significant cost and supply chain advantages.

In 2024, the utilization rate of new energy in the power industry will continue to maintain a high level. With the rapid advancement of global energy green and low-carbon transformation, new energy sources such as solar energy and wind energy will become an important part of the power industry. It is expected that the total installed capacity of new power generation and non-fossil energy power generation will reach a new high in 2024. Power equipment is still in the upward cycle, ultra-high voltage, new energy construction to drive the growth of electrical equipment demand. In 2024, with the vigorous development of UHV, new energy and other fields, the demand for investment in construction and electrical equipment in the power industry is expected to grow steadily.

In short, in 2024, the power industry will maintain steady growth, and the demand for electrical steel is expected to reach 13.4 million tons, an increase of 3% year-on-year.