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PrintReuters reported that if China's GDP grows 7.5% this year as officially forecast which would be the slowest pace in 23 years its iron ore consumption intensity will slip to 118 kilogram per USD 1,000 of GDP and crude steel usage to 78.8 kilogram.
Mr Dominic Bryant an economist at BNP Paribas said that and economic growth may ease further to 5% to 6% by 2020 cutting iron ore and steel consumption further.
The Reuters calculations showed that at 5% GDP growth, steel consumption intensity would drop to 76.8 kilogram per USD 1,000 of GDP while iron ore use will decline to 115.4 kilogram.
Mr Bryant said that “If China's new leadership manages to refocus the economy towards consumption, the share of investment in GDP could drop to 30 percent this decade from about 45 percent. The amount of steel per unit of GDP will also fall so your GDP becomes less steel intensive predicting steel consumption will flatten in 2015 and drop in the years to 2020.”
Iron ore demand faces a further blow as Beijing becomes more serious about closing mills in bloated industries such as steel, meaning record steel production will be a thing of the past.
Mr Jiang Feitao policy researcher at the China Academy of Social Sciences said that "Demand growth has slowed, market competition has intensified, environmental costs are rising and those enterprises that lack competitiveness are facing an increasingly serious battle for survival."
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