Has China Really Reached Peak Steel?

The consensus view among commodities analysts is that China’s steel consumption peaked in 2013 at 735 million metric tons. That would be bad news for iron ore producers. But a recent analysis suggests that China’s “peak steel” moment may not come until 2040. Although China’s per capita steel consumption will likely fall in the next few years due to the country’s economic slowdown, the country’s urbanization shift continues, and urban populations use more steel than rural ones (cities need steel to maintain and expand infrastructure, and urban dwellers tend to have more vehicles and appliances than their country cousins). While  analysts believe China’s urban steel consumption will fall from a peak of 765 kilograms per person in 2011 closer to 600 kilograms, projections indicate that the percentage of China’s population in urban centers will rise from 54 percent in 2014 to 67 percent in 2030 and between 70 and 80 percent in 2040. As a result, China’s total steel consumption will likely approach 900 million metric tons by 2040.