Global average steel prices are likely to trend downwards as China's domestic demand is expected to soften owing to a sluggish property sector, a report by Fitch Solutions unit BMI said on Thursday.

The research firm lowered its 2024 global average steel price forecast to $660/ton from $700/ton.

WHY IT'S IMPORTANT

The report notes both demand and supply headwinds to the global steel industry's annual growth, amid a slowing global economy.

While a dour global industrial and economic view is expected to impact steel supply, demand is hindered by the slowing global manufacturing sector affecting growth in major markets.

However, BMI still forecasts 1.2% growth in steel production and expects continued strong demand from India to drive steel consumption in 2024.

CONTEXT

Earlier this week, China's iron ore futures suffered their worst one-day price drop in almost two years, due to a raft of data that indicated the world's second-biggest economy is struggling to gain momentum.

U.S. manufacturing has also contracted over the last month and further declines in new orders and rise in inventory may subdue factory activity for a while, a survey by the Institute for Supply Management (ISM) showed on Tuesday.

WHAT'S NEXT

The study highlighted the beginning of a "paradigm shift" in the steel industry where 'green' steel produced at electric arc furnaces gains more traction versus traditional steel produced at the blast furnace.

(Reporting by Aatreyee Dasgupta in Bengaluru; Editing by Krishna Chandra Eluri)