RDP 2012-04: Chinese Urban Residential Construction to 2040 6. Conclusion

The medium- to long-term outlook for residential construction remains relatively strong in China. While growth in urban residential construction is expected to slow, the level of construction is nevertheless expected to remain high for a prolonged period of time. The prospects for steel used in residential construction are stronger still. We project that steel use in residential construction will grow for more than 10 years, reflecting improvements in building quality.

The prospective demand for primary resources associated with steel production is somewhat complicated by the matter of recycled materials. As China's steel structures age, they will be demolished, and the resultant scrap can be used as a substitute for newly smelted steel. In the past, there has been limited scope for steel recycling, as demolished buildings contained little steel. In the future, the availability of scrap will work to offset the demand for iron ore somewhat.

While residential construction accounts for around 9 per cent of GDP and 14 per cent of steel use, it has broader implications for steel demand. Appliances are required to fill the new homes. Commercial buildings and infrastructure are needed to service the new urbanites. These products and amenities will be positively correlated with residential construction, and so our projections for residential construction may be useful for analyses of these other activities.