Steel output
In 2006,
China's steel output continued to grow at a high speed. Up to December 15, the accumulated crude steel output for 2006 reached 400 million tons. By the end of the year, total annual output had surged up to nearly 423 million tons, with a year-on-year growth rate of 18 percent. It is forecasted that this figure, which managed to increase 23 million tons in only the last fifteen days of 2006, will reach only 460-470 million tons in 2007. From 2005 to 2006, total crude steel output increased by almost 100 million tons within a single year. However, a slowdown is expected in the trend of rapid expansion due to the predicted yearly growth rate of 10-11 percent in 2007. As to the total steel products output, it is forecasted that this figure will probably exceed 500 million tons in 2007.
Raw materials for steelmaking
Iron ore is the most important raw material required for the
steelmaking process. In 2006,
China's domestic
iron ore output was close to 570 million tons, representing a growth rate of 38.5 percent year on year. Due to the fast increase in local
iron ore supply,
iron ore imports were substituted to a certain degree. Total
iron ore imports nearly came to 325 million tons. Although the yearly growth rate was still at a high level of 18 percent compared to last year, the growth rate practically dropped by 6-7 percent compared to the same figure of 2005.
The hike of 9.5 percent in the 2007 international
iron ore prices is in line with local market expectations. Thus, the impact of the hike on the market has not been remarkable. Due to the rise in local demand for
iron ore and the output increase in overseas
iron ore, Chinese
iron ore imports in 2007 are expected to increase to 360-380 million tons, i.e. a year-on-year growth rate of 14-17 percent.
As regards
steelmaking's other important raw material, coke is almost entirely supplied by domestic manufacturers. The total annual domestic coke output was 260-280 million tons in 2006, representing a yearly growth of 17-18 percent. Due to the price drop in late 2006, the enthusiasm of local manufacturers started to decline, and the output growth rate also dropped accordingly. However, this downward trend came to a halt at the end of 2006. From Jan 1, 2007, the ex-factory price of coke saw respective increases of RMB 30 ($4) and RMB 20 ($3) per ton in
China's major coke-producing provinces of Shanxi and Hebei, due to the price hike in local coal. With the coal price expected to rise gradually in 2007, a similar coke price trend is predicted.
Steel imports & exports
In 2006,
China's exports of finished steel products exceeded 40 million tons, while exports of steel
slab &
billet were over 9 million tons. The year-on-year growth rates were 95 and 34 percent respectively. The 2006 import figures for finished steel products and steel
slab &
billet were 18 million and 380,000 tons respectively, with yearly decreases of 28 and 70 percent respectively. After being converted to the crude steel,
China practically realized the net export of steel with over 30 million tons of crude steel for the first in history.
It is estimated that total world demand for steel products in 2007 will reach 1.18 billion tons, up by 5.2 percent compared to 2006. Due the steady increase in demand, the balanced global supply-and-demand relationship and the advantages offered by
China's steel products, the country's steel exports are expected to increase in 2007. However, restricted by the import policies of the target countries,
China's steel exports will probably be seriously affected. Indeed, for annual exports a sharp drop of 32-35 million tons is predicted, down 16-18 percent compared to the 2006.