China's steel demand is expected to continue declining in April as deteriorating property sales weighs on the domestic steel markets, industry sources told S&P Global Commodity Insights.
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Register NowThe cash crunch being faced by property developers may extend through much of 2022, persistently undermining China's steel demand this year, sources said.
China's apparent consumption of crude steel declined 3.8% on the year to 72.29 million mt in March amid a slowing property sector, calculations based on crude steel output, net exports and steel inventories by S&P Global showed.
China's property sales value fell 26.1% on the year in March, declining further from a 19.3% year-on-year drop in January-February, according to latest data from the National Bureau of Statistics.
The year-on-year decline in housing starts also worsened to 22.3% on the year in March from 12.2% in January-February.
China's infrastructure investment rose 8.8% on the year in March and most manufactured goods also saw a year-on-year growth, but the fall in property construction was enough to pull back China's overall apparent consumption of steel in March.
The property sector accounts for around 30% of the country's total steel demand. The share would be considerably higher if steel demand from property-related sectors, such as home appliances and engineering machineries, is also factored in.
China's steel demand is likely to fall further in April amid COVID-19-related restrictions -- that are expected to impact construction and manufacturing activities more in April than in March -- and housing starts that are likely to fall as developers face tight cash flow, steel market sources said.
"July will be the peak season in 2022 for developers' debt maturities, some developers will be faced with cash crunch in the following months," a source said, adding that under this circumstance, property construction and steel demand will remain subdued.
Some sources expected China's housing starts in 2022 to drop as much as 20%-30% on the year, weighing heavily on the overall steel demand, especially in the second quarter.