Citi: China's steel demand is in a later-cycle phase than cement, and the medium-term decline is expected to be more gradual.

Citi released a research report stating that China's apparent cement demand peaked in 2014 and has since fallen by about 3.3% per year; the bank believes steel is in a later-cycle phase relative to cement, and the medium-term decline is expected to be smaller. The trends in road construction and railway investment over the past three years have already reflected this divergence. Steel demand last peaked in 2020, and has since fallen by about 3.9% per year, with a 2.9% year-on-year decline in the first half of this year. The bank noted that the past five years also included a sharp drop in real estate demand and steel destocking, so the decline is expected to slow or stabilize. If steel demand maintains a year-on-year decline of about 3.9%, that equates to an annual demand reduction of about 30 million to 35 million tons; however, the bank expects India's steel demand growth to offset at least half of that. China's annualized cement output has fallen to its lowest level since 2009, while steel output is about 65% higher than the 2009 level; if China's net steel exports fall back to the 2009 level (close to negligible), with other conditions unchanged, steel output would be only about 43% higher than in 2009. The bank also noted that cement is more early-cycle, while steel is more driven by durable consumer goods and more advanced infrastructure. Road construction is slowing, with a 9.1% year-on-year decline in the first four months of 2025 and an 11% year-on-year decline for full-year 2024, marking the third consecutive year of decline; railway investment has been more resilient, rising 5.1% year-on-year in the first quarter of 2025 (up 11% year-on-year for full-year 2024), and is on track for the highest year of railway investment on record. Apparent steel demand peaked at about 1.03 billion tons in 2020, and over the following five years, it fell by about 3.9% per year.