Development of major steel consuming industries in China

Posted on 15 April 2014

Source: SEAISI
As reported by the China Iron and Steel Association (CISA )at its 12th International Steel Market and Trade Conference, China’s apparent crude steel consumption in 2013 registered 728 million tonnes, an increase of 7.1% year-on-year. The volume for the first two months of 2014 was 120 million tonnes, a year-on-year growth of 2.5%. This points to a slowdown in growth of steel demand in the country.

Many of the major steel consuming sectors in China managed to
maintain a continuous growth rate in 2013 while a few sectors saw a slowdown in growth.

According to CISA, the machinery industry as a whole registered a moderate growth rate and showed a steady development in 2013. The total profit of machinery enterprises in 2013 was RMB 1.41 trillion, a year-on-year increase of 15.56%. Output of most of the products of agricultural machinery maintained its growth momentum but saw a decrease in small and medium sized tractors and feed production equipment.

Output of machine tools was found to suffer a downward trend in 2013. Domestic production of cutting machine tools registered 725,000 units, a decrease of 1.54% y-o-y. Heavy mining machinery saw a negative growth rate of 5.08% y-o-y in 2013. However, material handling machines witnessed faster growth in 2013.

The mechanical industry’s growth picked up moderately in 2013 after experiencing sharp decreases in 2011 and 2012 and is expected to maintain a steady growth path from 2014 onwards. The power generation equipment sector, on the other hand, continued its negative growth trend with declines of 4-5% over the last two years.

The fastest growing sector in China is the automotive industry which showed a new high growth rate in production and sales. Passenger car production registered 12.1 million units in 2013, an increase of 12.4% y-o-y. Sales grew by 12% y-o-y to 12 million units. MPV and SUV vehicles showed dramatic increases in production in 2013 with output of 1.3 million units and 3 million units, up 168% y-o-y and 51% y-o-y respectively.

The shipbuilding industry in China continued to register declines in completed vessels, after hitting a new record high in 2011. In 2013, the sector completed the building of 45.34 million deadweight tons of ships, a decrease of 24.7% y-o-y. it is projected that shipbuilding activity in China will remain sluggish  in 2014 with about 40 million deadweight tons of completed vessels and about 120 million deadweight tons of order in hand.

Growth rate in electrical appliance industry remained steady in China. Air conditioner production registered 143 million units in 2013, a surge of 11.6% y-o-y. As for the other household appliances products, the production of high-end products such as big-volume multi-door refrigerators and full-automatic roller washing machine saw significant increases in production volume in 2013. Refrigerator production volume rose by 10.6% y-o-y in 2013, followed by growth rate of 9.4% for freezer production and 8.2% for production of washing machine.

While production of refrigerators increased, sales remained sluggish. A total of 76.91 million units of refrigerators were sold within the country in 2013, almost the same volume as that in 2012. Meanwhile, total production registered 93.41 million units in 2013, a surge of 10.6% y-o-y.

As for the other major steel consuming sector in China i.e. the real estate sector, it was still booming as a result of a huge increase in housing sales in early 2013. However, the indicator saw a slowdown in the second half of 2013. Overall investment saw an increase of +/- 20% in 2013. It is expected that the real estate sector may slow down in 2014 as the banks started to tighten their financing for this sector.

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