Overview of Chinese steel industry going into 2007

Tuesday, 05 December 2006 17:33:34 (GMT+3)   |  
       

SteelOrbis Shanghai China's Metallurgical Industry Economic Development Research Center and Mysteel jointly hosted the annual 2007 Steel Industry Situation Report/Mysteel Annual Conference in Shanghai on November 26. Speaking at the conference, Luo Bingsheng, the vice-president of the China Iron & Steel Association (CISA), said that China's steel industry should concentrate mainly on satisfying domestic market demand, while showing due consideration for resources, energy, environmental protection, and other similar issues. Meanwhile, three factors have boosted the Chinese steel industry, according to Luo Bingsheng. These are fast growth in fixed assets investment, rapid development of steel consuming industries and brisk international demand. In the Jan-Oct period this year, Chinese steel imports and exports totaled 15.53 million mt and 32.84 million mt respectively, accounting for 4.08 percent and 8.63 percent of total domestic steel production over the same period. Mr Bingsheng stated that China is currently developing towards greater industrialization, and he forecasted that the country would sustain this development on an upward trend. Furthermore, he added, the steady and stable growth in domestic demand also contributes to the development of the steel industry. With its apparent consumption totaling 338.12 million mt of crude steel in 2005, China constitutes the biggest steel consumption market in the world. However, the growth of apparent consumption is decreasing gradually - 22.31 percent in 2001, 20.85 percent in 2002, 25.73 percent in 2003, 14.58 percent in 2004, 14 percent in 2005, and finally 9.73 percent in the Jan-Oct period of this year. While demand for long products remains at a high level, demand for flat rolled is increasing due to the requirement of rising consumption. In 2005, the apparent consumption of long products accounted for 49.24 percent of total domestic production, that of flat rolled constituted 41.73 percent, that of pipe steel 6.42 percent, and that of railway steel 0.87 percent. From January to October this year, the apparent consumption of the above products accounted for 48.8 percent, 41.92 percent, 7.14 percent, and 0.74 percent respectively. During the 2001-2005 period, China's steel industry recorded significant achievements, with cumulative production amounting to 1.1949 billion mt in crude steel, meeting 92.8 percent of the total domestic demand. The ratio of China's crude steel production to world production also jumped from 15.2 percent in 2001 to 31.1 percent in 2005. At the same time, global crude steel production increased 284.8 million mt, with China accounting for 78.6 percent of this quantity. China's steel industry has also made great progress as regards development of equipment and facilities. There were only 47 blast furnances (> 1000 m3) in China in 2000, this figure rising to 80 in 2005. As regards high speed wire rod mills, there were 35 in 2000, and 63 in 2004. With regard to hot wide strip mills, there were 9 in 2000, and 24 in 2005 with production capacity reaching 71 million mt. Regarding cold wide strip mills, there were 7 in 2000, while there were 31 in 2005 with capacity reaching 24.05 million mt. Coming to medium plate mills, we see that there were 26 in China in 2000, rising to 35 in 2005 with a total capacity reaching 29.49 million mt.. Production capacity of steel mills is expanding continuously. In 2000, only Baosteel could be classified as a mill with crude steel production greater than 10 million mt. This number has now risen to 8 mills - Baosteel, Anshan New Steel, Tangshan Steel, Wuhan Steel, Shougang, Shagang, Jinan Steel, Laiwu Steel. In the same period, the number of mills classified in the 5-10 million mt category increased from three - Angang, Shougang, Wuhan Steel - to nine - Maanshan Steel, Hualin, Baotou Steel, Handan Steel, Panzhihua Steel, Anyang Steel, Taiyuan Steel, Jiuquan Steel, Jianlong. Steel mills accelerate their steps towards mergers and restructurings. The three major special steel mills in northeastern China (Dalian, Wushun and Beiman) merged and reorganized as the Dongbei Special Steel Group. Meanwhile, Wuhan Steel bought and restructured Echeng Steel, and then united with Liuzhou Steel. Angang merged with Benxi Steel. Tangshan Steel, Xuanhua Steel and Chengde Steel merged and underwent restructuring. Shougang has taken a controlling stake in Shuigang. Shougang and Tangshan Steel jointly invested in constructing Shougang Jingtang Steel. Tangshan Jianlong purchased and reorganized Wushui Steel. Citic Pacific has taken controlling stakes in Daye Special Steel and Shijiazhuang Steel. During his speech, Luo Bingsheng also pointed out a series of problems existing in China's steel industry, including illogical product structure, low industrial centralization, and weak capacities for independent innovation.

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