China’s steel sector investment growth cools down
According to recent market reports, the central government's macro-economic policies have started to take effect in the steel sector.
The
China Iron and Steel Association (CISA) reported that steel sector investment grew by 54.7% on an annual basis to Yuan 84.8 billion (around $10.2 billion) in the first six months of the year. The growth rate was down from 107.2% recorded in the first quarter of this year. Statistics revealed that June's investment growth rate decreased by 16.4% year-on-year.
Officials attribute the slowdown to the central government's measures to prevent overheating in the steel, aluminum and cement sectors.
Most of the investment in the steel industry is now being directed towards technical upgrading and high-grade projects, rather than low-grade
production capacity.
Additionally, new investment regulations issued last week emphasize that any new steel
manufacturing projects must be submitted for approval to the State Council.
Investment controls in the steel sector supported growth of domestic steel demand and output to return to reasonable levels.
In the first half of the year, steel demand reached 150.7 million tons, with an increase of 19.2% compared to the same period of last year. The growth rate declined by 9.1% points compared to first quarter.
Country's steel output amounted to 124.7 million tons during the first six months of the year, up by 21.1% compared to the same period of last year. The growth rate was down by 5.3% points against first quarter.
CISA forecasts
China's steel demand and output to rise by 14.8% and 13% to 307 million tons and 277 million tons respectively this year.