Chinese steel demand
In the previous part of this series, we looked at US steel demand indicators. In this part, we’ll look at Chinese steel demand indicators. Since China is the world’s largest steel consumer, the country’s steel demand tends to impact global steel markets (MT)(PKX).
The construction sector is the largest steel end consumer in China (FXI). We don’t get China’s real estate and fixed asset investment data for the first two months of the year, owing to the country’s Lunar New Year holidays. But there was some moderation in China’s construction activity in the second half of 2017. Notably, steel is an early-cycle construction material, so a slowdown in China’s construction activity could have an impact on the country’s steel demand (X)(AKS) this year.
According to data provided by the China Association of Automobile Manufacturers, China’s vehicle sales totaled ~2.8 million vehicle units in January 2018—a minor increase of about 0.1% from the corresponding month in 2017. China’s official manufacturing PMI (purchasing managers’ index) fell to 50.3 in February, which is the lowest level since July 2016. Although the data coincided with the nineteenth consecutive month of expansion, it fell short of analysts’ estimates.
Last year, China’s steel demand grew at a healthy pace, led by the rebound in the country’s construction and manufacturing activity. In 2018, growth rates might cool off from 2017.
China’s steel production has also moderated this year. See Global Steel Production Takes a Breather after a Strong 2017 for how steel production is shaping up in China.