China’s sound machinery industry to boost steel demand
China expects machinery
production to boost steel
consumption, meaning that more specialty steel will be required.
Data from
China Machinery Industry Federation show that in 2005,
China's machinery industry retained the rapid growth rate above 20 percent. Moreover, the export of
China's mechanic products contributed a lot to the developments in all the sectors in
China.
Large scale machinery enterprises' total value of gross output amounted to RMB 4.14 trillion, up 21.55 percent year on year, which is 5.86 percentage points lower compared to the growth rate of the previous year. The total sales revenue reached RMB 4.06 trillion, up 22.19 percent, 5.4 percentage points lower compared to that in the previous year. The total value of gross output has been on the rise for six months starting from April 2005, 0.4 percent higher on average monthly basis. The rate even went up to 20 percent after September, especially in the growth rate of November total value of gross output. The sales revenue saw coherent increases.
The proportion of steel products in raw material cost is high, the changes in the
production and sales index in machinery industry show that the demand for steel products from machinery sector keeps a good growth rate in 2005.
In 2005, the export revenue of machinery industry kept a rapid increase at RMB 677.71 billion, up 29 percent year on year. The export revenue accounted for 16.69 percent of the total sales revenue. Its contribution rate is 20.64 percent, a bit higher compared to that of the previous year (20.15 percent).
It is predicted that the growth rate of
production and sales of domestic machinery industry will reach around 15 percent and the export activity will also be in an upward trend at about 15 percent. The machinery industry is the largest steel consuming sector in
China. Data shows that at present,
China's machinery industry consumes 40 to 50 million metric tons of steel products per annum, accounting for 11 to 15 percent of the total
consumption.
The total demand for steel from the machinery industry will keep increasing in the following years. According to some analysis,
China will keep a growth rate of 5 percent before 2020. The improvement in export of mechanic products will drive up the sales of steel products. Meanwhile, the development of the machinery industry requires improvement in the varieties and performance of the steel products, therefore, there will be some supply and demand imbalance in specialty steel products.