China’s apparent crude steel consumption down four percent in 2014

On February 5, China’s Ministry of Industry and Information Technology (MIIT) issued a report on the situation in the Chinese steel industry in 2014. Accordingly, China’s apparent crude steel consumption in 2014 amounted to 740 million mt, down four percent year on year. Average daily crude steel output in China in 2014 amounted to 2.25 million mt, reaching its highest level in June at 2.31 million mt and dropping to its lowest level in November at 2.11 million mt. The crude steel output of large and medium-size Chinese steelmakers in 2014 totaled 660 million mt, up 1.7 percent year on year, while the crude steel output of other smaller steelmakers totaled 170 million mt, down 1.8 percent year on year.

The overall average finished steel price in China has continued to soften. In the years 2011, 2013, 2013 and 2014, the respective average finished steel sales prices of large and medium-sized steelmakers in China were RMB 4,468/mt ($729/mt), RMB 3,750/mt ($612/mt), RMB 3,442/mt ($562/mt) and RMB 3,074/mt ($502/mt). As of the end of December 2014, the composite steel price index (CSPI) for the Chinese domestic market had decreased to 83.1 points, down 16.2 percent year on year and falling to its lowest level since January 2003. In particular, the price of HRB 400 rebar had declined to RMB 2,791($455/mt), down RMB 785/mt ($128/mt) compared to the price at the beginning of 2014, while the HRC price had decreased to RMB 3,131/mt ($511/mt), down RMB 528/mt ($86/mt) compared to the price at the beginning of the year.

At the same time, the supply and demand situation in the raw materials market has changed, while prices of coke, scrap and imported iron ore indicated large decreases. For instance, the import price of 62 percent Fe content iron ore dropped to $68.7/mt CFR by the end of 2014 from $133.1/mt CFR at the beginning of the year, down 48 percent, the price of coke declined to RMB 893/mt ($146/mt) from RMB 1,425/mt ($235/mt) over the same period, down 37 percent, while the price of scrap decreased to RMB 1,928/mt ($315/mt) from RMB 2,445/mt ($399/mt) in the given year, down 21 percent.

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