China’s property distress sours steel sector in warning sign for economy

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BEIJING — Debt problems at a major Chinese property developer have now spilled over into a vital artery of the nation’s industrial engine – the steel sector – and started to ripple through to other critical parts of the world’s second-largest economy.

The spreading balance-sheet crisis at real estate firms is a warning for policymakers as a swing in the fortunes of the steel industry would have significant repercussions for China’s economy, with cement, glass, and household appliances all vulnerable to demand drops.

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Already, steel prices are down from their record highs seen earlier this year due to easing demand from construction activities, which account for over half of the metal’s consumption, while steelmakers’ share prices have also been hurt.

Steel’s acute sensitivity to the ebbs and flows in construction and manufacturing makes it a closely-tracked bellwether for China’s economy, which has started to slow down from the second quarter https://www.reuters.com/world/china/china-q3-gdp-growth-hits-1-year-low-raising-heat-policymakers-2021-10-17. Steel firms are also massive employers that support a vast supply chain.

Hitting steel operations, real estate developers have dialed back investment in projects to…