Summary: Alfa Bank’s Boris Krasnozhenov says the country’s investment in infrastructure would back less conservative predictions, pegging growth of up to 4%-5%.
The China Metallurgical Industry Planning and Research Institute estimates that Chinese steel production could come off by 0.7% this year from 2019 to around 981 million mt. Last year, the think-tank estimated the country’s output at 988 million mt, up 6.5% year on year.
Consultancy group Wood Mackenzie is slightly more optimistic, predicting a 1.2% uptick in Chinese output.
However, Krasnozhenov sees both estimates as being unduly cautious.
China’s steel output may well gain 4%-5% and exceed 1 billion mt this year, the Moscow-based metals industry analyst said, basing his forecast on the country’s investment in fixed assets (FAI).
Last year’s FAI would annualize to $8.38 trillion, or around 60% of China’s GDP. The latter, worth $13.6 trillion in 2018, in World Bank estimates, could top $14 trillion in 2019.
The Asian Development Bank estimates that development in the region costs $1.7 trillion annually, including climate change mitigation and adaptation costs. Of the total $26 trillion investment spread across a decade and a half until 2030, some $14.7 trillion is allocated for power, $8.4 trillion for transport and $2.3 trillion for telecommunications infrastructure, according to thebank.
China absorbs at least half of this budget.
Alfa Bank’s Krasnozhenov argued that, while spending on infrastructure remains so heavy, expecting Chinese steelmaking to slow down to 1% would be inaccurate.