Reports from the Steel Market and Trade Conference, held by the China Iron and Steel Association (CISA) on March 25-26 in Guangzhou, have indicated that steel inventory in the Chinese market has remained at high levels. In addition to the impact of the decline in steel exports and the increase in steel imports, the Chinese steel industry is still subject to an imbalance between supply and demand. Furthermore, with raw material prices climbing up continuously, steel producers are expected to face increased cost pressure.
As CISA vice president Luo Binsheng predicted during the conference, due to the improvement in the macroeconomy and due to the government's stimulus policies, in 2010 China's crude steel output is expected to increase to 600 million mt, showing a year-on-year increase of 6.2 percent. Mr. Luo also pointed out that, although the domestic economic situation has already stabilized, the situation of excess supply as compared to demand still seems rather severe. Nevertheless, the CISA official said that steel prices in China would probably climb up further under pressure from higher production costs.
Meanwhile, Mr. Luo stated that the many large scale projects launched in 2009 would provide significant impetus in boosting steel market demand in 2010.