As we come up to the end of 2007, it is clear that during the past twelve months China's steel market brought much excitement and remarkable profit levels to the players involved. Besides the local steelmakers, almost all traders earned money from the booming market situation. In their own words, once you have goods in hand, you can make money! Will such a positive trend continue in 2008? The answer would appear to be "yes".
The development trend of China's economy will be the most important factor governing the Chinese steel market in the coming period. According to the report of the Seventeenth National Congress of the Communist Party of China held in October, in 2008 China's government aims to increase investment in order to boost progress in industrialization, information technology, urbanization, marketization and internationalization, and to strive for the positive and rapid development of the national economy.
Undoubtedly, the Olympic Games will make a great, direct contribution to China's economic growth next year. Furthermore, 2008 is also election year in China, and newly-elected officials at all levels of government are expected to take action to promote local economic development.
All these domestic factors contribute to the optimism regarding the country's economic situation. Many institutions across the world have predicted that China's GDP growth rate will remain at about 10 percent next year and that the growth rate as regards fixed assets investment will stay at about 20 percent.
The global economic situation, both current and future, would also appear to be in China's favor. It is widely expected that the world economic trend will continue in an upward direction. Although the sluggish US economy will have a negative influence on global economic development, the basic worldwide situation will not change. In particular given the outstanding economic performances of China, India, Russia and Brazil, market confidence continues to remain high. The IMF has predicted that the global economic growth rate in 2008 will be at a high level - i.e. 4.8 percent. Meanwhile, global steel demand has also been maintaining a positive trend and is expected to continue doing so. According to the data from the International Iron & Steel Institute (IISI), global steel demand in 2008 will be 1.28 billion tons, up 6.8 percent; meanwhile, China's steel demand will be up by 11.5 percent.
Under the influence of favorable domestic and global economic circumstances, as the world's biggest steelmaking country, China's steel market gives a promising picture for 2008. Of course, there are still some potential serious risks which maybe bring unpalatable results; these include inflation, increasing trade protectionism and trade conflicts. These factors will be worthy of attention in the year ahead.