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China's infrastructure provides sustained support for steel demand

China has accelerated its approval of infrastructure projects this year to support the economy still affected by the coronavirus pandemic, with most projects starting in the second half of 2020, helping boost demand. steel.

From January to June, China approved 13 airport projects with a total investment of 103.96 billion yuan ($ 14.71 billion), equivalent to 57% of the total number of approvals in 2019.
Meanwhile, 19 rail and urban rail transport projects were approved during the same period, with 12 expected to soon be approved. The length of these combined projects is 4,638 km, or 77% of the total length approved last year, the analysis shows.
The construction of the projects, which mainly lasts from 2020 to 2025, will require a total of 23.8 million tons of steel.
China has also increased financial support to help accelerate infrastructure construction.
Local governments issued 3.75 trillion yuan of special bonds in 2020, up from 2.15 trillion yuan in 2019. From January to June, about 60% of the annual quota was issued.
Special bonds must be invested in infrastructure, not in property-related projects. About 64% of special bonds issued in 2019 have found their way into the real estate sector, and therefore cannot boost infrastructure growth. The Chinese government is getting stricter this year, according to industry sources.
Infrastructure construction has been creating strong demand for steel since April, due to improved financial support, and because developers and builders have been hastily covering the time lost in February. - March when the country is closed.
The construction craze is expected to be completed in June, but ongoing financial support and newly approved projects will ensure sustainable steel demand in the infrastructure sector in 2020.
Some steel market sources are expected to invest in China's infrastructure to increase by about 10% per year by 2020, from a negative 6.3% from January to May. Steel demand from mechanical construction Infrastructure, therefore, is likely to increase further in H2 compared to Q2 / 2020.
Source: Satthep.net