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Home > MEPS Steel News - 08.05.2013

CHINESE FINISHED STEEL PRODUCTION FORECAST TO INCREASE BY ALMOST 5 PERCENT IN 2013

MEPS forecasts the outturn of all finished steel products for sale this year in China at 740 million tonnes. This equates to an annual gain of 4.7 percent. MEPS’ estimate for total flat products mill production is 292 million tonnes – up 4.2 percent on the figure in the previous twelve month period. Total long products output is projected to expand by 5 percent to 448 million tonnes. Although these growth rates are modest compared to those in most of the previous decade, the projected tonnage increase is still substantial, at more than 33 million tonnes. Apparent consumption is expected to expand by a slightly smaller amount.

Improving market sentiment and rising steel prices led to Chinese mills ramping up hot rolled coil production during the first quarter of this year. Buying activity remained subdued so stock levels continued to expand. As a result, we believe producers will reduce output as 2013 progresses. Despite this, the annual total is expected to rise by almost 7 percent in the current twelve month period relative to the 2012 figure.

A lack of orders for new vessels continues to hurt the Chinese shipbuilding industry. The country is not alone, with neighbouring Japan and South Korea struggling with the same problem. Demand for plate in the Asian region is contracting and consequently, exports are increasingly difficult to achieve. We believe that the outturn of plate in China will decline, once again, this year.

Growth in output of cold rolled and coated steel is set to slow in 2013. The prospects for the end-user segments of these products - automotive, white goods and construction - is for modest expansion.

We forecast slower growth in the production of wire rod and reinforcing bar in 2013 to a more sustainable rate following the recent trend of double-digit annual percentage rises. Construction of affordable homes in China will continue. This should support further increases in output, albeit at a reduced level compared with 2012. A range of infrastructure projects is planned, including hydro, nuclear power and dams. However, there is some concern regarding funding at the local and national level of government. Furthermore, the authorities are attempting to dampen the real estate sector.

Output of heavy and medium sections, including rails, is predicted to increase by around 5.5 percent this year - similar to the gain recorded in the prior twelve month period. A comparable rise is forecast for merchant bar production in 2013. This follows stagnation in the previous year. The Chinese engineering and construction industries are showing signs of expanding activity. Moreover, further strong growth is predicted in overseas sales.


Source: MEPS World Steel Outlook Quarter 1-2013 - Now available and MEPS China Steel Review

Also see: MEPS Steel Reports Online

 

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