China’s steel demand growth to slow as property policy tightens Report

Insight 10 September 2019

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What’s inside this report?

China’s property sector consumes just under a third of the country’s total steel demand.

We analyse the impact of tighter property sector policy on crude steel production and iron ore demand. Our report includes a detailed account of how the property sector has responded to each round of policy tightening from 2017 onwards – including changes in new starts, property prices and property market fundamentals.

What key questions does this report answer?

How will slower demand growth from the property sector affect steel and iron ore over the next few years?
Property sector steel demand has proved resilient in the face of tighter polices until now. Will it be different this time?
How have property prices responded to tightening policies?
What’s driven the sharp increases in house prices over the past 20 years?

China’s top policymakers now see the property sector more as a drag to their proposed economic transition and a risk to the economy.

This report comes with datasets and charts, including this one, which tracks how house prices have responded to policy tightening in China so far. Scroll down to see the full table of contents.

Report summary

China’s new round of stricter policy tightening on the property market limits developers’ access to finance. This additional policy tightening will reduce the resilience of property steel demand seen after the last round of policy tightening. Ultimately, we believe the property sector will be hit hard by the new restrictions on financing and this will result in much lower steel demand growth from the sector.

Executive summary
Property steel demand has been resilient despite tighter policies
because of more property pre-sales
Property prices have shown even more resilience
leading to another round of stricter policy tightening
Why are policymakers so serious this time?
What impact will this have on steel demand?

Tables and charts

This report includes the following images and tables:

Resilience of new starts by floor space resulted in increased steel demand
Developers have become increasingly reliant on pre-sales
More property sales as pre-sales

Housing prices showed even more resilience to the previous policy tightening
Nearly 40% of new loans are used in the property sector
Households’ liability has increased sharply, potentially squeezing their consumption
Property steel demand will slow in 2019/20 and will enter negative growth territory