Chinese mills are launching new silicon steel projects day by day, due to the insatiable demand for this product from the major industries such as electric motor and electric power industry.
However, currently there are only four mills in
China which are able to produce silicon steel: Baoshan Iron & Steel (
Baosteel), Wuhan Iron & Steel (Wuhan Steel), Anshan Iron & Steel (Anshan Steel) and Taiyuan Iron & Steel Group (Taisteel). These four mills totally produce slightly over 2 million tons cold rolled non-oriented silicon steel per year. Among these four mills, Wuhan Steel is the only one that can produce cold rolled oriented silicon steel, with just 132,000 tons in 2005. This figure will reportedly exceed 200,000 tons in 2006. As
China's leading steelmaker,
Baosteel is discontent because of its handicap in this area, and it has hastened R&D spending and
investments to begin producing oriented silicon steel in 2008.
China's appetite for silicon steel appears so gigantic that the above mentioned
production is far from satisfying it. Nevertheless, the silicon steel market in
China is experiencing major changes in three aspects:
1. Supply of silicon steel
Silicon steel output increased rapidly in recent years. In 2003, the above mentioned four mills' cold rolled non-oriented silicon steel output was 903,600 tons. In 2004 and 2005, the figure increased to 1.13 million tons and 1.88 million tons respectively. And it is expected to reach 2.5 million tons in 2006. Taking into account the expected import of 1.2 million tons, cold rolled non-oriented silicon steel supply will be 3.7 million tons in 2006.
Regarding cold rolled oriented silicon steel, Wuhan Steel's –the sole producer- yearly output was 125,300 tons, 127,200 tons and 132,100 tons from 2003 to 2005 respectively. Wuhan Steel is planning to increase its
production to 200,000 tons in 2006 with the new equipments put into operation. If Wuhan Steel actualizes the projected figure, then its share in the domestic cold rolled oriented silicon steel market will increase from the 33 percent in 2005 to 50 percent in 2006.
2. Demand for silicon steel
Due to the rapid economic development,
China's demand for silicon steel is very big and the demand is still expanding. The average demand for silicon steel has been around 3.5-4 million tons per annum since 2003. The demand is mainly from household appliances, electric motor and transformer industries. Among them, the highest demand is from the household appliances industry. In the last three tears, annually around 1 million tons of silicon steel has been consumed in this industry. And the annual
consumption in the next three years is expected to hover around 1.1-1.5 million tons.
3. Imports of silicon steel
Similar to other steel products' import situations, silicon steel imports have dropped in the last three years. In 2005, non-oriented silicon steel import decreased by 26.1 percent, or 375,000 tons compared to that in 2003. Meanwhile, oriented silicon steel import decreased by 12.1 percent, or 35,500 tons compared to 2003. The decline is expected to continue in 2006 and later.
It is known that around fifteen countries in the world are able to produce cold rolled silicon steel. Due to
China's booming market, steelmakers from these countries entered in
China's domestic market to compete with local mills. But as the imports are dropping, such foreign steelmakers will probably change their strategies from just exporting products to establishing joint ventures with local mills.