Chinese steel makers set for historical year

Chinese steel makers set for historical year

2005 is a very important year for China. It marks the conclusion of the country’s tenth “five-year” plan and the transition to the eleventh such plan. It is vital that the transition proceed smoothly. One of the key industries to keep an eye on in China during this year is the steel industry, which is gearing up for a historical year. Under the guidance of the Central Government, China’s domestic steel industry should exceed an output of 300 million tons. Such monstrous output reminds us that we should pay close attention to quality, not just quantity. Domestic plants’ total scrap demand and declared imports will fall slightly in 2005, while the quantity purchased domestically and produced in China will continue its pattern of significant year-on-year increases. Some experts believe that China’s scrap import volume this year will be 14.63 million tons, which could basically meet domestic demand. In fact, Chinese scrap importers have become more rational after being regulated and registered last year. At present, 3056 foreign companies have received authorized from the General Administration of Quality Supervision, Inspection and Quarantine of the People's Republic of China to conduct business within the country. China imported 10.2256 million tons of scrap in 2004. The plan for 2005 calls for a 43.07% year-on-year increase, the largest growth rate in recent years. Thus, scrap supply will be tight in China during 2005. In 2004, the surging costs of stainless steel raw materials, ferromolybdenum, ferrochrome and metal nickel caused difficulties for stainless steel makers at home and abroad. Many chose to use low cost stainless steel scrap, leading to a rise in stainless steel imports in China. China’s stainless steel scrap import in 2004 totaled 138 thousand tons. A huge jump in stainless scrap import was witnessed in the fourth quarter, indicating that China’s steel production transitioned to high value-added products. It is forecast that China’s stainless steel scrap import in 2005 may increase significantly.