“Too early” to write China steel growth obituary, says BHP forecaster

Chinese steel output will continue to increase modestly, BHP Billiton is predicting, contrary to some analysts’ predictions.

The Australian reports that BHP predicts a compound annual growth rate of “a little over” 1 per cent a year to the mid-2020s, reaching between 935 million tonnes and 985 million tonnes.

“We think it’s far too soon to write obituaries for growth in Chinese steel production,’’ wrote BHP’s head commodities forecaster Huw McKay on the company’s Prospects blog.

McKay wrote that output would be driven by construction, which accounts for about half of China’s steel.

“[O]ver the next 20 years, China’s urban population is likely to increase by almost another quarter of a billion people; and the rising middle class will be looking to upgrade to bigger and better apartments, sitting above more extensive underground car parks – meaning what’s built (and renovated) will be more steel intensive,” he wrote.

Others have been less optimistic about China’s future steel output. Li Xinchuang, president of the China Metallurgical Industry Planning and Research Institute told The Australian this week that Chinese steel output peaked in 2014 at 823 million tonnes.

Last week, China’s president Xi Jinping said his country would use the “utmost effort” to cut production by 100 – 150 million tonnes by the end of the decade, ahead of the G20 summit.