‘China will not become a net steel exporter in 2005’

‘China will not become a net steel exporter in 2005’

The March 7th edition of UK-based Finical Times newspaper reports that Bruno Bolfo, president and proprietor of Duferco, the largest independent traders in the world, predicts that global steel prices will drop this summer. Bolfo indicates that shrinking demand for steel in China will push steel prices into their first sustained drop in three years. Bolfo reminds that China was still a net steel importer in 2004 of about 15 million tons. However, he suggests that China could become a net steel exporter of nearly five million tons this year due to a drop off in domestic demand. Bolfo cites China steel consumption in 2004 as the basis for his prediction. While China’s crude steel consumption has increased continuously, the annual increase in crude steel consumption dropped from 53.09 million tons in 2003 to 27.71 million tons in 2004. In fact, statistics data show that China was a net exporter of both steel products and billet/slab in September 2004. The country’s net export volume then enlarged even further in November and December. The 4th International Steel Market and Trade Conference held in Guangzhou on March 9th, 2005, provided the perfect forum for discussing China’s steel imports and exports. Deputy Secretary-General of the China Iron and Steel Association (CISA) Mr. Li Shijun asserted, "China will not become a net steel exporter in 2005." Mr. Li expresses that China is still a huge steel consumer. He points out that even though China’s exports are increasing, so are its imports. He said that last year’s high international prices caused the explosion in Chinese exports, the bulk of which were long products. On the hand, China will continue to rely upon imports of high-valued added flat and strip products for years to come. Mr. Li therefore predicts that even as China enters into the latter stages of its industrialization process, the country’s steel demand and prices will maintain a long-term growth trend. As to questions that China’s steel demand would slow, Mr Luo Bingsheng, Executive vice-chairman of CISA, points out that China’s apparent steel consumption growth rate will stay above 10% in 2005 based on forecasts that China’s GDP will increase 8% in 2005. He adds that if Chinese GDP grows 9% and the total social fixed asset investment increases 20%, China’s apparent steel consumption could expand 13.9% year-on-year. Mr Qi Xiangdong, Deputy Secretary-General of CISA, estimates that China’s steel output in 2005 may reach 345.29 million tons, up 16.2% or 48.06 million tons. At the same time, he says that steel consumption could reach 343.83-355.69 million tons, up 10.1%-13.9% or 31.53-43.39 million tons.