Pimco - After Years of Overconstruction, Could Steel Demand Buckle in China?

- We expect downside risks to steel demand to continue to materialize, as past housing construction growth rates are unsustainable amid constrained infrastructure spending growth in China. Other end users are also unlikely to propel China’s steel demand.

- Pressure in the markets for iron ore and metallurgical coal will likely make a meaningful recovery in prices difficult.

- In the absence of Chinese steel demand growth, we expect steel production overcapacity will persist in China and continue to remain a headwind to global steelmakers amid export pressures.