Chinese demand for steel may begin to decline within two years as the country seeks to "rebalance" its economy, according to Philipp Englin, director general of information service World Steel Dynamics.
The Chinese economy and many facets of its "investment-driven model" are "really a house of cards," Englin said, with the country having effectively "compressed" between five and 15 years of steel demand to "a matter of two or three years" as it accelerated fixed-asset investments to stimulate growth in the face of lower global consumption of its manufactured products.
However, this increased investment, including in housing developments, has resulted in the build-up of "massive" levels of debt, Englin said, with China now looking at how best to "rebalance" its economy away from spiraling investment.
The country's "openly-stated policy" is to move away from investment to promoting consumption, he added.
But with each dollar of consumption only generating one-seventh the steel demand than that of fixed-asset investment, the result of such a move would be a huge reduction in steel demand growth.
"It's just a matter of time, it could be a matter of two or three years or even less, when we are not sitting talking about whether Chinese steel demand is going to be going up 3%, 5% or 10% next year, we will be wondering if it's going up at all next year," Englin told Mexican steel chamber Canacero's third annual steel conference in Mexico City.
"In fact we will be wondering if may be declining," he added.
China is the world's largest consumer of steel, responsible for 45.7% of global demand in 2012, according to the World Steel Association (WSA).
Brazil is the biggest steel producer in Latin America, at 34.5Mt in 2012, ninth highest globally, with Mexico 13th at 18.1Mt, according to WSA figures.
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