Research by MEPS International Ltd suggests that the Chinese steel industry will end the year resurgent. Production in China has been rampant in H1 2011 but research shows that demand is far from spent.

Following a summer slowdown, MEPS forecasts that crude steel output will rise by 7%, year on year, to 176Mt in the final quarter.

MEPS highlights in its latest report ‘China Steel Insight’ that booming demand from the construction industry, which has driven steel consumption to record levels, has been led by private housing projects.

The government’s much trumpeted economic housing scheme has provided little impetus for steel demand so far this year.

Official estimates suggest that construction is falling behind schedule. By the end of May work is reported to have commenced on only 30% of the 10 million economic housing units targeted to be started in 2011.

MEPS research suggests that the central government will be successful in accelerating the pace of construction of these projects but not until the final quarter, when an extra 6Mt of steel will be used.