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Company news about China's ongoing construction crisis drives global steel prices down

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Mr. Gary Lee
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China's ongoing construction crisis drives global steel prices down

2024-08-28

The decline in global steel prices is driven by the ongoing real estate crisis in China and, to a lesser extent, by the weak manufacturing activity worldwide. These have resulted in an oversupply of steel, pushing prices down. A situation that echoes the devastating slumps in 2008 and 2015, which led to the consolidation of China’s steel producers.


China’s efforts to revive its construction sector have failed, with new construction starts (a key driver of steel demand) declining by approximately 24% in the first half of 2024, following significant drops in 2022 and 2023. In the forthcoming months, it is unlikely for demand from the property sector to improve because of the significant time lag between land purchase and construction completion. Consequently, many steel mills are expected to cut production further to balance the market and stabilise prices.


As shown on the graph below, iron ore prices in China have also significantly decreased, as it is the primary ingredient in steel making. Iron ore prices fell further below the USD 100-per-tonne mark and major mining companies are likely to reduce their production to prevent iron ore prices from falling too drastically. Shipments from Australia and Brazil already slowed significantly in July.

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News Details
Home > News >

Company news about-China's ongoing construction crisis drives global steel prices down

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China's ongoing construction crisis drives global steel prices down

2024-08-28

The decline in global steel prices is driven by the ongoing real estate crisis in China and, to a lesser extent, by the weak manufacturing activity worldwide. These have resulted in an oversupply of steel, pushing prices down. A situation that echoes the devastating slumps in 2008 and 2015, which led to the consolidation of China’s steel producers.


China’s efforts to revive its construction sector have failed, with new construction starts (a key driver of steel demand) declining by approximately 24% in the first half of 2024, following significant drops in 2022 and 2023. In the forthcoming months, it is unlikely for demand from the property sector to improve because of the significant time lag between land purchase and construction completion. Consequently, many steel mills are expected to cut production further to balance the market and stabilise prices.


As shown on the graph below, iron ore prices in China have also significantly decreased, as it is the primary ingredient in steel making. Iron ore prices fell further below the USD 100-per-tonne mark and major mining companies are likely to reduce their production to prevent iron ore prices from falling too drastically. Shipments from Australia and Brazil already slowed significantly in July.

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