Speaking at the "New Horizons in Global Steel Markets" 11th Annual Conference organized by SteelOrbis in Istanbul on November 17, Su Changyong, director of international cooperation at the China Iron and Steel Association (CISA), said that more than 80 percent of this year’s capacity reduction target of 45 million mt in China was completed by the end of September, with some regions already meeting their target for the whole year.
China’s crude steel production registered a growth of 3.9 percent year on year in September reaching 68.17 million mt, bringing total crude steel production for the first nine months to 604 million mt, up 0.4 percent year on year. Although the growth rate in October is small, it is important to note that it is the first growth for 20 months since 2015, Mr. Su pointed out.
According to the CISA official, in the January-October period this year China’s imports amounted to 10.91 million mt, up 2.1 percent, while the country’s exports for the first ten months increased by 0.7 percent to 92.74 million mt, both year on year. Mr. Su indicated that in the January-September period China’s supply volumes to its main export destinations continued to grow, while its exports to the EU, the US and Latin America declined. During the same period, Chinese exports to Turkey totaled 1.8 million mt, down 16 percent year on year.
Mr. Su said that Chinese finished steel prices began to rebound in December 2015 after sliding continuously over a period of four years. Meanwhile, total steel investments in China came to RMB 269.94 billion for the January-August period, down 7.53 percent year on year. Investment in mining and iron-making dropped by 30.14 percent and 20.19 percent respectively, while investment in steelmaking increased by 12.74 percent and investment in steel processing rose by 2.22 percent.
According to the CISA, in the January-September period this year, China’s domestic iron ore production was 941 million mt, down 3.3 percent year on year, its iron ore imports increased by 9.79 percent to 92.99 million mt while the average iron ore import price was $53.58/mt, down $8.86 year on year. Mr. Su stated that the good news is that the iron ore price is moving in a more coordinated way with steel prices, which contributes to the more sustained profitability of the steel industry.
The Chinese economy remained stable in general for the third quarter of 2016 with a GDP growth rate of 6.7 percent, down slightly by 0.2 percentage points over the same period last year. Mr. Su said that the producers price index (PPI) rose by 0.1 percent year on year in September, which is six percentage points higher compared to the same month last year and 0.9 percentage points higher than the previous month. This is the first positive growth since the index fell below zero in March 2012.
Mr. Su concluded by saying that in the 2016-2020 period China aims to reduce steel capacity by 100-150 million mt and to increase capacity utilization from 70 percent to 80 percent, while it also aims to reduce energy consumption and polluting emissions by over 10 percent and 15 percent respectively.