(Yicai Global) Jan. 14 -- Demand for steel in China, the alloy's largest producer and consumer, will rise just 2 percent this year because of a downturn in the vehicle and shipping markets, according to a new report. That is much less than last year's 6 percent gain.

Demand will reach 890 million tons in 2019, the report released by the China Iron and Steel Association said today. Carmakers' needs are expected to fall 2 percent to 51 million tons, after dropping 5 percent to 52 million tons in 2018, the report added.

The nation's car market, the world's biggest, shrank for the second straight year in 2019, contracting 8.2 percent, according to data released yesterday by the China Association of Automobile Manufacturers. As the downturn moves into a third year, sales are seen falling another 2 percent.

In its report, the CISA predicted that investment in real estate and the pace of new construction may slow, though infrastructure investment will pick up. In addition, the home appliance sector will maintain steady growth, while some sub-sectors in the auto, shipping, container and machinery industries will likely contract.

The report also said that due to the continued decline in new orders, shipbuilding completions are expected to decrease, and the industry's demand for steel will fall to 15 million tons, down 6 percent from a year earlier, compared with a 3 percent increase in 2019 to about 16 million tons.

China's container exports have fallen sharply in 2019 as a result of the global trade downturn, with annual steel consumption in the container industry estimated at about 5.2 million tons, down 28 percent from 2018. And demand for steel in the industry is expected to decline by 2 percent to about 5.1 million tons this year.

Editor: Peter Thomas