07/18/2024 | Press release | Distributed by Public on 07/17/2024 20:50
18 July 2024
As the world's manufacturing powerhouse, China has the highest global demand for crude steel, with the market experiencing remarkable growth since 2010. In 2023, China's crude steel demand reached 911 million metric tons, up an estimated 50% from 609 million metric tons 13 years earlier. When adding in exports and changes to inventory, China surpassed 1 billion metric tonnes of steel production for the fifth year in a row in 2023.
However, the growth in crude steel demand has not been even across industries. In this graphic, we partnered with the Visual Capitalist to visualise how demand for steel on a sectoral level has shifted from 2010 to 2023.
Steel Demand for Machinery, Infrastructure, and Building Construction
We observed steel demand across the following sectors:
In 2010, the largest share of Chinese steel demand came from the construction sector, accounting for an estimated 42% of the country's total steel needs. Machinery (20%) and infrastructure (13%) were the second and third industries with the highest steel demand, respectively.
Over the last 13 years, however, steel demand has shifted towards the machinery and infrastructure industries and has emerged as the top sector for demand.
Sector | 2010 (%) | 2023 (%) |
Machinery | 20 | 30 |
Infrastructure | 13 | 17 |
Building construction | 42 | 24 |
Transport | 12 | 9 |
Durable goods | 7 | 8 |
Other | 6 | 12 |
The demand for steel from the construction industry was estimated to drop from 42% of total demand to 24%, as construction firms purchased 37 million metric tons less steel in 2023 compared to 2010. This slump can, in part, be attributed to the Chinese real estate crisis and real estate developer bankruptcies, which led to a slowdown in residential building starts.
The machinery sector, on the other hand, has witnessed incredible growth. It rose from an estimated 20% share of overall Chinese steel demand in 2010 to 30% by 2023, boosted by an influx of equipment renewals. Infrastructure saw an estimated growth over this timeframe from 13% to 17%.
Steel Demand for Transportation and Durable Goods
The share of steel demanded by the transport sector was estimated to fall from 12% in 2010 to 9% in 2023. However, there was an uptick in the amount of steel used by the industry - rising from around 73 million metric tons in 2010 to 82 million metric tons 13 years later. And, with more than half of all new electric vehicles (EVs) sold worldwide made in China, the sector could receive support if EVs continue to gain in popularity.
In fact, the green economy needs the steel industry - it remains vital for the production of emerging technology. As such, it is important that nations take steps towards "cleaning" their steel industries. China is doing so with its focus on carbon capture, utilising and storing technologies, employing green hydrogen metallurgy, and introducing electric furnaces.
Steel demand for durable goods rose slightly from 2010 to 2023. However, the relatively steady share accounted for by this sector masks the near-doubling of absolute steel purchased by this sector - up from 43 million metric tons to as estimated 73 million metric tons.
The Path Forward for Steel
The Chinese steel industry remains robust - growing by an estimated 50% from 2010 to 2023 - despite significant changes beneath the surface.
As the energy transition progresses, further changes in industry demand for steel are likely, especially with the increasing prominence of clean technologies, such as EVs. Conversely, steel demand from the construction industry remains closely tied to the outlook of the country's housing sector.
Article originally published on Visual Capitalist, 12 July 2024