Citigroup: China's steel demand is expected to decline more slowly in the middle of the later cycle than cement

The Zhitong Finance App learned that Citibank released a research report saying that after peaking in 2014, China's apparent demand for cement fell by about 3.3% every year; the bank believes that steel is more of a “late cycle” than cement, and the mid-term decline is expected to be lower. The trend of road construction and railway investment over the past three years has reflected this difference. The most recent high level of steel demand was seen in 2020. Since then, it has fallen by about 3.9% every year, and fell 2.9% year on year in the first half of this year.

The bank pointed out that the past five years have also included a sharp drop in real estate demand and the removal of steel from inventory, so the decline is expected to slow down or stabilize. If steel demand continues to fall by about 3.9% year on year, it is equivalent to a reduction in demand of about 30 million to 35 million tons per year; however, the bank expects the increase in Indian steel demand to offset at least half of this.

China's annualized cement production has fallen to its lowest level since 2009, and steel production is about 65% higher than the 2009 level; if China's net steel exports fall back to 2009 levels (almost negligible), steel production will only be about 43% higher than 2009 under other conditions.

The bank also said that cement is in the early stages, while steel is more driven by durable consumer goods and more advanced infrastructure. Road construction has slowed down, falling 9.1% year on year in the first four months of 2025 and 11% year on year for the full year of 2024, falling for the third year in a row; railway investment is more resilient, rising 5.1% year on year in the first quarter of 2025 (11% year on year for the full year of 2024), which is expected to be the highest year for railway investment. Apparent demand for steel peaked at around 1.03 billion tons in 2020, then fell by about 3.9% each year for the next five years.