(Yicai) Dec. 22 -- China’s steel consumption will likely decline this year, with demand expected to keep shrinking next year, according to the latest industry report.

Steel consumption in China will probably fall 5.4 percent to 808 million tons this year from the year before, according to a report released by the China Metallurgical Industry Planning and Research Institute on Dec. 19. Steel demand is projected to further drop 1 percent to 800 million tons next year.

This year, steel consumption declined mostly because of the deep adjustments in the real estate industry. In fact, steel use in the construction sector plunged 13 percent to around 400 million tons. Next year, related demand is expected to continue declining, down 4.1 percent to 384 million tons.

Steel consumption also shrank in the container and steel-wood furniture sectors but grew in the automotive, machinery, energy, shipbuilding, bicycle, and motorcycle industries. This trend will likely continue next year, the report predicted.

In the first 10 months of the year, the added value of the machinery industry expanded 6.1 percent from a year earlier, much higher than the average growth in the industrial and manufacturing sectors. Steel consumption in the machinery industry is estimated to rise 1.7 percent to about 180 million tons this year.

Demand for machinery and equipment is projected to be driven by the green transformation, upgrading in the steel and petrochemical industries, and major projects, such as the hydropower development on the Yarlung Zangbo River and Xinjiang-Xizang Railway. Steel demand in the machinery industry is forecast to inch up 0.6 percent to 181 million tons next year.

Steel consumption in the automotive industry will likely jump 11 percent to 63.9 million tons this year and continue to grow 4.4 percent to 66.7 million tons next year.

The MPI also predicted global steel consumption to decline 1.8 percent to 1.72 billion tons this year and increase 1 percent to 1.74 billion tons next year.

Editor: Futura Costaglione