How permanent would Chinese demand be?

How permanent would Chinese demand be?

China has lately been playing a very important role in steel consumption. The extremely high levels of demand by this country has been supporting the global steel industry. Besides its great quantities of imports, China at the same time produces certain amount of steel and is currently in preparations of expanding its production capacities. The steel demand in China has been like this for the last couple of years however especially in 2002 the country's support to the global steel industry has become stronger. Total tonnage China imported in 2002 is recorded as 24.5 million tons of finished carbon steel plus 2.6 million tons of stainless steel. This reveals a 42% rise of carbon steel imports and 39% increase of stainless steel imports into the country, compared to the import levels of 2001. The only products that imports of which have not hiked are slabs and billets, however, this can be related to the increasing levels of domestic production that are satisfactory to meet the demand for these products. On top of this, it is estimated that China produced a total of around 200 million tons crude steel during the year 2002. This reflects almost a 20% increase over the 2001 total production. Other steel producing countries are trying to act cautious reading Chinese market and making future plans and are trying not to depend only on the frenzy demand coming from this country, as it might not last forever. Various predictions exist in the market for the possible duration of this high demand. The existance of industrial growth and numerous infrastructure projects such as gas and electricity transmission lines, railways, waterways, etc., on a five year plan basis assure that the country will be in need of serious quantities of steel until the end of year 2005. Despite the above stated facts, it would better be taken into consideration that such high demand, even under existance of such projects focused on steel requirement, is not likely to last too long. Latest reports from China reveal that most of the major mills are looking to expand their production capacities in China. The products of light and heavy section are the main products, production of which are planned to be expanded. Consequently imports of especially these products can be expeced to slow down once the capacity expansion process completes. Therefore, if any further expansion is to be expected, it might be for the flats imports. Although the Chinese mills are also planning to develop sheet production capacity, it is commented in the market that this might not soon be enough to meet the demand.