Na­tion’s steel de­mand loses its strength

China Daily (Hong Kong) - - BUSINESS - By DU JUAN du­juan@chi­nadaily.com.cn 900 800 700 600 500 400 300 200 100 0 40 35 30 25 20 15 10 5 0 -5

The growth rate of China’s steel de­mand will de­cline from 6.3 per­cent this year to 3.2 per­cent in 2014 in the wake of the coun­try’s eco­nomic trans­for­ma­tion and the gov­ern­ment’s ef­forts to im­prove the en­vi­ron­ment.

The na­tion’s steel con­sump­tion next year is es­ti­mated at about 715 mil­lion met­ric tons, which rep­re­sents a 3.2 per­cent year-on-year growth rate, Li Xinchuang, head of the China Me­tal­lur­gi­cal In­dus­try Plan­ning and Re­search In­sti­tute, said on Fri­day.

He es­ti­mated that steel con­sump­tion this year will be 693 mil­lion tons.

“The gov­ern­ment will carry out re­form poli­cies to boost the econ­omy as well as in­vest­ments poli­cies in sec­tors in­clud­ing high- speed rail­way and the en­ergy-sav­ing in­dus­try, which will be ben­e­fi­cial for the steel in­dus­try,” he said.

IRON ORE IM­PORTS

How­ever, in­dus­trial con­sump­tion of steel will be curbed by the gov­ern­ment’s poli­cies to im­prove air qual­ity, which will re­sult in less steel us­age in some high-pol­lut­ing sec­tors in 2014.

In ad­di­tion, over­ca­pac­ity in the sec­tor and the lack­lus­ter global eco­nomic con­di­tions have led to slow­ing in­vest­ment growth in the coun­try, which will also re­duce steel de­mand.

He es­ti­mated that the ship­build­ing in­dus­try will con­sume 12.5 mil­lion tons of steel this year, down 21.9 per­cent com­pared with last year.

“The steel in­dus­try’s down­stream busi­ness will see slower de­vel­op­ment next year. The ship­build­ing in­dus­try, specif­i­cally, will face neg­a­tive growth, which will lead to flat steel con­sump­tion in 2014,” Li said.

In the con­struc­tion sec­tor, China is ex­pected to use 381 mil­lion tons of steel this year, which rep­re­sents an an­nual growth rate of 4.4 per­cent. How­ever, next year, the growth rate will drop to 2.4 per­cent with es­ti­mated con­sump­tion of 390 mil­lion tons in the sec­tor, ac­cord­ing to the in­sti­tute.

The growth rate de­cline will also be seen in the auto man­u­fac­tur­ing in­dus­try. Ac­cord­ing to the in­sti­tute’s es­ti­mate, China will use 46.5 mil­lion tons of steel in the sec­tor this year, up 11.2 per­cent year-on-year, while de­mand from the sec­tor in 2014 will be about 50.2 mil­lion tons, up 8 per­cent on an an­nual ba­sis.

In the ap­pli­ance man­u­fac­tur­ing in­dus­try, the steel us­age’s growth rate will fall from 8.7 per­cent in 2013 to 5 per­cent in 2014.

Steel use by rail­way con­struc­tion com­pa­nies will be 5.2 mil­lion tons in 2014, up 8.3 per­cent year-on-year, but the fig­ure is 3.3 per­cent­age points less than 2013’s growth rate.

“China’s steel de­mand in­crease will con­tinue to slow down for sure,” said Xu Xiangchun, in­for­ma­tion di­rec­tor of Mys­teel.com, a steel in­dus­try con­sul­tancy firm.

He said the coun­try’s ur­ban­iza­tion drive will sup­port China’s econ­omy in the fol­low­ing years, but steel de­mand dur­ing the process will be­come sta­ble rather than see dra­matic growth.

Li also warned of risks re­lated to the over­ca­pac­ity prob­lem in the steel in­dus­try, say­ing that the coun­try should not add any new steel pro­duc­tion ca­pac­ity.

“The ex­ces­sive steel ca­pac­ity needs to be re­duced with strict mea­sures,” he said.

China will ex­port about 60 mil­lion tons of steel prod­ucts this year, 5 mil­lion tons more than last year, Li added.

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