ArcelorMittal SA warned that Chinese steel demand will contract this year due to headwinds facing the real estate sector, in the latest sign of the widening fallout from the China Evergrande Group’s crisis.
China dominates global steel markets as the largest producer and consumer, accounting for more than half of total demand. The real estate sector has been roiled by a debt crisis that’s weighed on economic activity, reducing demand for commodities like steel, at the same time as the country battles an energy shortage.
ArcelorMittal said it still expects steel consumption outside of China to rise 12% to 13% this year, as economies reboot after lockdowns. However, Chinese demand is now expected to decline slightly, revised down from the 3% to 5% annual growth the company predicted in July.
China’s property and construction industries contracted in the third quarter for the first time since the start of the pandemic, driven by a slump in real estate. The property sector accounts for 40% of the nation’s steel consumption, making it a key driver of global demand.