China’s 500 Million-Ton Steel Output in 2007 Creates Market Anxiety

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Researched by Industrial Info Resources (Sugar Land, Texas). The global industry watch on China’s steel production has shifted from concerns that the production bubble will pop and trigger a decline in the demand for resources to a feeling of anxiety about the effect of increasing Chinese steel exports.

In the first eleven months of 2006, the country’s National Bureau of Statistics reported that steel products output reached 425 million tons. In the month of November, steel products output reached 41.75 million tons, a 23.9% increase for the period year-on-year and 0.5% up on October 2006. Hot rolled plates output for November saw a staggering increase of 190.1% year-on-year to 573,200 tons and for the January – November period the growth was 83.5% to reach a total of 5.05 million tons.

The second fastest product growth in the sector was cold rolled plates with an increase of 53.2% to 11.68 million tons in the period. Wire output rose at a rate of 14.5% to 6.12 million tons for November and for the eleven-month period rose 19.1% to a total of 64.94 million tons.

Total steel output is expected to top 500 million tons in 2007 driven by demand in shipbuilding, the automotive industry and new infrastructure projects for steel plate. The 500 million-ton plus output would more than cover estimated domestic demand, which would switch pressure onto exports. This is the cause of the anxious watch on the situation being kept by international trading partners.

In the past twelve months, China has become a net steel exporter with total exports for the January – November period up to 37.46 million tons, which shows an increase of 100.3% for the same period in 2005. In the same period, imports dropped 29.1% to 17.01 million tons. In November, steel exports reached 4.63 million tons and imports were at 1.48 million tons. The net export figure of 3.15 million tons in November was 10.14% up on the October net total.

In the same eleven-month period, China’s iron ore imports grew at the slowest rate for some years to total 298 million tons reflecting a growth rate of 19.8%. But the latest customs figures show a 30% growth rate for November with a total of 28.56 million tons of ore imported.

India’s iron ore exports to China shrank by 7.51% in the January- October period reducing to a value of $4.3 billion from $4.65 billion in the same period in 2005. Iron ore is India’s leading export to China.

Chinese domestic production of iron ore rose by 37.7% through October with large mines output totaling 406 million tons. This eases the overall dependence on overseas suppliers, but the equation is not that simple, as many of China’s end-users need the steel production supply chain to be fed with higher-grade ores available from overseas suppliers.

Industrial Info Resources (IIR) is a Marketing Information Service company that has been doing business for over 23 years. IIR is respected as the leader in providing comprehensive market intelligence pertaining to the industrial processing, heavy manufacturing, and energy-related industries throughout the world.