Modelling the potential saturation levels of iron and steel in China: wider economic impacts and circular economy implications
2018
Iron and steel demand in China has been both a huge source of economic growth and carbon dioxide emissions over the last 15-20 years. China produces around half of the world’s crude steel (World Steel Association, 2017). However, concerns about air pollution, future economic development, climate change, resource efficiency, and the circular economy have started positing questions about what the role of steel production in China will be over the coming decades. In particular what will happen as changes in economic structure, production efficiency and environmental standards.
Many global modelling studies extrapolate future demand for materials based on available data of the previous few years or decades. However, this short time-frame ignores the longer development pattern undertaken over several decades or most of a century. As countries develop it is likely that their per capita consumption of materials will begin to decrease and that stocks per capita will then saturate.
In this analysis we attempt to explore a range of potential saturation levels for steel in China and consider the wider economic impacts of steel saturation on other economic sectors as well as important steel producing and consuming other countries. We use the ENGAGE-materials model (Winning et al, 2017) developed by UCL ISR which is based on GTAP 9 for 2007. Here we keep the additional iron ore mining sector developed in ENGAGE-materials but simplify the distinction between primary and secondary steel production in order to consider only the the overall saturation effect in the steel industry.
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