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Home > MEPS Steel News - 07.03.2013

Chinese finished STEEL Supply and demand round up from meps

MEPS estimates for finished rolled steel output in China, last year, is just over 707 million tonnes. This equates to an increase of approximately 7 percent compared with 2011. Production of long products surged by more than 10 percent. In contrast, the flat products category expanded by less than 2 percent. In 2013, MEPS forecasts the outturn of all finished steel products for sale at 735 million tonnes - up 4 percent, year-on-year.

Growth in hot rolled coil output is expected to slow this year to around 2 percent from 4.4 percent in 2012. Demand for this product, for further processing, escalated last year due to newly commissioned welded tube manufacturing units.

The shipbuilding industry is depressed in China. This is adversely affecting output at the plate makers. Total production fell 10 percent last year, with heavy plate declining by a larger percentage than medium plate. The outlook for 2013 is poor.

Output of cold rolled and coated coil is expected to grow by approximately 5 percent this year, compared with 2012. The prospects for the white goods and automotive sectors are for modest gains.

Rail supply and demand is forecast to continue to strengthen and the outlook is positive. The railway segment is a focus of government spending to boost steel demand. Output of heavy and medium sections, including rails, is predicted to increase by around 5 percent again this year.

MEPS forecast slower growth in the production of wire rod and rebar in 2013 to a more sustainable rate following the recent trend of double-digit annual percentage rises. The government plans to build six million affordable homes in 2013. This should support further increases in output, albeit at a slightly reduced level. A range of infrastructure projects are planned including hydro, nuclear power and dams. However, there is some concern regarding funding at the local and national level of government. Furthermore, the outlook for real estate investment is becoming uncertain.

The Chinese machinery industry slowed dramatically last year after over a decade of solid gains. Merchant bar production grew by just 1 million tonnes (1.4 percent) in the period. A hike of more than 3 million tonnes is envisaged in 2013.

The total balance of trade is expected to be relatively unchanged this year at near 27 million tonnes. Imports and exports are both predicted to grow by around 500,000 tonnes. In 2012, imports fell by more than 10 percent whereas exports jumped by 20 percent. This led to an increase in the trade surplus of almost 8.5 million tonnes.

MEPS forecast that apparent consumption of finished steel products will reach 708 million tonnes in 2013 - up 4.1 percent, year-on-year. Use of long products will continue to grow faster than that of the flat category, reflecting the better prospects of the construction industry compared with the manufacturing segment.

Source: MEPS China Steel Review

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