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
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.
MEPS World Steel
Outlook Quarter 1-2013 - Now available and
China Steel Review
Also see: MEPS
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