China’s steel sector, long the engine of its industrial rise, now faces a structural slowdown as construction wanes and exports surge. The shift exposes the limits of Beijing’s investment-led model and threatens upheaval across global iron-ore markets.
China’s long dependence on heavy industry has made its economy unusually steel intensive. Even as growth slows, the sector remains vast: China still produces more than half of the world’s steel and accounts for more than a quarter of global carbon emissions. But with construction and infrastructure activity slowing, domestic demand is falling, leading to persistent oversupply, a surge in exports and renewed trade friction with the United States and the European Union.
These pressures are exposing the limits of an investment-led model that has shaped global markets for two decades. They also signal a turning point for China’s steel producers, its major iron-ore suppliers and the global effort to cut industrial emissions.
Steel intensiveness
In 2000, China consumed around 124 million tonnes of steel, which was roughly on a par with the US but lower than the 168m tn consumed in the EU. By 2020, China was consuming over one billion tonnes of steel annually, while the EU’s steel use had fallen to 131m tn. It is nearly impossible to overstate the steel intensity of China’s economy.
It is nearly impossible to overstate the steel intensity of China’s economy.
Typically, economies increase steel use as they develop, until they reach GDP-per-capita incomes of about US$40,000–US$50,000, at which point steel use starts to taper off. This makes sense: by this stage, most of the necessary infrastructure and housing stock is already in place. Consequently, steel consumption in construction tends to be higher in developing countries, whereas the auto sector accounts for a larger share of steel use in developed economies.
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