While steel production has declined slightly, end-user demand so far in 2024 has seemed to be even slower, leading to accelerated piling up of steel inventories, a trend that has been seen around for over the past two years.

As of March 10, finished steel inventories at steel mills and spot markets monitored by the CISA totaled 33.74 million mt, up 72% from the end of 2023, compared with the growth rate over the same period of 50% in 2023 and 62% in 2022.

The average daily construction steel transaction in China’s major spot markets so far in 2024 was about 40% lower than in the same period of 2023, according to some trading sources. They attributed worse-than-expected steel demand in the property and infrastructure sectors for weak transactions.

The decline in new home sales and new home construction starts have shown no sign of abating so far in 2024, while new infrastructure projects have also declined in tandem with local governments downsizing infrastructure projects to lower their debt levels, some sources said.

          “Property and infrastructure sectors have decisive influence over China’s steel demand, so it is to be expected that the domestic steel demand could remain subdued for much of 2024,” a mill source said. The weakness could persist in the steel market also because decline in steel production had also been slower than that of steel demand, due to the huge steel capacity, the source said.

In 2023, the property sector accounted for around 30.8% of China’s total steel consumption, while the infrastructure sector accounted for 26.4%, S&P Global data showed.