The Australia National University recently held a conference called China Update 2010. A complete list of papers presented at the conference can be found here. Among the papers was a very interesting analysis of China’s steel intensity. See paper #5 China’s metal intensity in comparative perspective by Huw McKay, Yu Sheng and Ligang Song.
The authors attempt to compare China’s steel intensity to that of other countries at similar stages of economic development. The authors’ main methodological contribution to this type of comparative steel intensity analysis is to adjust for some of the unique structural characteristics of China’s economy and its industrialization process. The main conclusions of the analysis are:
- China’s steel intensity is likely to peak around 2024 when GDP per capita reaches $15,000
- The peak level of steel demand will be 700-800 kg per capita, which suggests China will consume 1.1 billion tonnes of steel by then, up from 542 million tonnes consumed in 2009
As can be seen in the graph below, if China peaks at 700-800 kg per capita, they would be above average but below South Korea. By comparison, US steel intensity peaked at 525 kg/capita in 1973 and is now below 400.
The authors are careful to point out that making projections into the distant future based on the current structure of GDP and industrialization trends is fraught with risk, and they expect that China’s actual development path will deviate from the projections provided in the paper. On the other hand, their methodology is more sophisticated than many of the steel intensity projections we’ve seen and it provides at least one point of reference regarding how long China’s steel intensive phase of development might last and how high demand might go. Any thoughts?