Metals and Steel Industry Trends China - 2022

市場監測

  • 中國
  • 金屬,
  • 鋼鐵

2022年09月05日

Lockdowns and woes in the real estate sector weigh on the industry

China Metals Credit Risk 2022

Demand for metals and steel remains subdued in China due to pandemic-related local lockdowns, while ongoing problems in the real estate sector affect construction activity. In 2022, steel demand is expected to decrease 0.7% to 947 million tons, following a 4.7% decline in 2021. According to the National Bureau of Statistics of China (NBS), property investment declined 4% year-on-year between January and May 2022. Measures like loosening monetary policy and easing financing restrictions in the property sector will cushion but not reverse the downward trend in construction activity and related metals and steel demand.

China Metals output 2022

Metals and steel demand from automotive has started to increase again as the car industry has rebounded from several lockdowns and vehicle sales are supported by government initiatives. However, this surge in demand remains shaky in the current economic environment and cannot compensate losses from the construction decline.

Overcapacity remains a problem in the steel sector despite efforts to deal with the issue. About 700 small steel mills, with 140 million tons of steel capacity deemed sub-standard, have shut down since 2016. Another 150 million tons of inefficient capacity at larger firms has also gone. However, steel production continues to climb, outpacing demand.

Increasing costs and falling steel prices have eroded the margins of many businesses. According to the NBS, profits in the metals industry decreased 34% year-on-year in H1 of 2022, with profits in the iron & steel segment declining 69%. The government is pushing steel mills to shift to lower carbon equipment and processes, which adds pressure on liquidity and margins.

Payments in the Chinese metals and steel industry take between 60 days and 120 days, and payment behavior has been poor during the past two years. Given subdued demand and late payment from downstream sectors like construction, the number of protracted payments is high. Metals and steel businesses are often highly leveraged, while banks are reluctant to provide loans. In 2022, double-digit increases in the number of non-payments and business cannot be ruled out. This, together with overcapacities, imbalanced product structures, eroding margins and high gearing has led us to assess the credit risk situation of the industry as “Bleak”.

相關資料

免責聲明

Each publication available on or from our websites, such as, but not limited to webpages, reports, articles, publications, tips and helpful content, trading briefs, infographics, videos (each a “Publication”) is provided for information purposes only and is not intended as a recommendation or advice as to particular transactions, investments or strategies in any way to any reader. Readers must make their own independent decisions, commercial or otherwise, regarding the information provided. While we have made every attempt to ensure that the information contained in any Publication has been obtained from reliable sources, Atradius is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information in any Publication is provided ’as is’, with no guarantee of completeness, accuracy, timeliness or of the results obtained from its use, and without warranty of any kind, express or implied. In no event will Atradius, its related partnerships or corporations, or the partners, agents or employees thereof, be liable to you or anyone else for any decision made or action taken in reliance on the information in any Publication, or for any loss of opportunity, loss of profit, loss of production, loss of business or indirect losses, special or similar damages of any kind, even if advised of the possibility of such losses or damages.