Speaking at SteelHome's 10th Steel Development Strategy Conference held in Shanghai over the weekend, Wu Wenzheng from SteelHome indicated that the overcapacity problem in China cannot be resolved in the short term, adding that many steel companies have high debts and are operating at low margins, with many others incurring losses and having huge financial costs.
Mr. Wu stated that, due to the current market conditions, one third of steel traders have withdrawn from the market, while another third have reduced their activities. He went on to say that in 2013 steel consumption in China reached 539 kg per capita, while capacity utilization stood at 76 percent. He said that only 14 percent of production is exported, and it is impossible to see 30 percent of output being exported like in many other countries.
Regarding 2014, Mr. Wu said that China's crude steel demand is expected to increase by three percent to 750 million mt, with crude steel production expected to amount to 805 million mt, up 3.3 percent, both year on year. Meanwhile, China's GDP growth rate for 2014 is forecast at 7.5 percent.
According to 2014 forecasts, Mr. Wu said the iron ore imports will go up by 50 million mt to 870 million mt, while iron ore prices are expected to fluctuate between $110-140/mt, but mostly between $120-140/mt.
He concluded by saying that the Chinese industry needs to be centered on financial management, to give more emphasis to e-commerce and information management, to focus on restructuring, and to implement low cost strategies and better purchasing management.