How is China affecting the steel industry?

Concerns about global economic growth and high energy prices continue to have negative effects on the iron and steel industry. 

The contraction in global crude steel production, which decreased by 5.9% yoy in June, was 5.5% in the first half of the year. With the effect of weakening demand in China, the downward trend in metal ore prices, especially iron ore, continues.

China's steel demand should bounce back

The medium-term demand outlook for Chinese steel products remains uncertain for 3 reasons:

Mandatory steel production cuts aimed at reducing emissions in China,

The financial crisis involving Chinese contractors and

COVID-19 quarantines

The real estate sector will be decisive

According to the statement made by China's National Bureau of Statistics (NBS), total investment in the real estate sector in China fell by 6.4 percent year on year to $1 trillion in the January-July period of this year.

In the same period, the area of ​​commercial real estate sold in China was recorded as 781 million m2, down 23.1 percent year on year.

While the real estate sector, which is one of the main sectors with a strong demand for steel, was adversely affected by the Covid-19 epidemic in the country, the inability of several major contractors to pay their debts negatively affected the sector, weakening the demand for steel.