Speaking today, March 23, at the SteelOrbis 2015 Spring Conference & 72nd IREPAS Meeting being held in Paris, Eric Louvert from BNP Paribas said that in 2014 apparent demand in
China decreased for the first time, while the rest of the world indicated growth. With
China's
crude steel output rising by one percent and its domestic steel consumption falling by 1.4 percent in 2014, Chinese exports increased by 50 percent year on year in the given year. He said he believes that Chinese steel consumption will decline further.
According to Mr. Louvert, in 2015 competition in the export markets will be fierce as Chinese volumes will be challenged by the CIS market which benefits from dramatic currency depreciations and incentives to export steel rather than raw materials. He expects that this will trigger a wave of antidumping and safeguard actions. However, the sustainability of massive Chinese exports is uncertain as authorities will react to the dramatic air pollution in many Chinese cities.
The BNP Paribas official indicated that steel raw material prices are at their lowest level since the 2009 crisis, with iron ore supplies surging tremendously in 2014 and expected to continue to rise. He said that the price fall was expected, though the extent of the decline was not anticipated.
Regarding the major iron ore producers which are still adding more capacities, Mr. Louvert explained that the strategy of the major producers is to kill competition instead of reducing output amid the weak price environment. They are pushing their
production to increase volumes and decrease the cash cost in order to kill competition, he asserted.
Eric Louvert also drew attention to Chinese steel consumption per capita which is already high by international standards, at over 500 kg per capita, adding that this is well above even
Japan, which uses more steel in buildings since it is a seismic area.