According to Mr. Wang Liquin, Vice Chairman of China Iron and Steel Association, China’s crude steel production reached 808 million tonnes in 2016, an increase of 1.2% y-o-y. Speaking at the 15th International Steel Market and Trade Conference, held recently in Tangshan, China, Mr. Wang also mentioned that China’s crude steel production picked up by 5.8% y-o-y in the first two months of 2017 to 128.77 million tonnes. China’s steel export, on the other hand, was down by 3.5% y-o-y in 2016 to 108.49 million tonnes. Export of steel in the first two months of 2017 registered 13.17 million tonnes, down by 25.7% y-o-y.
China’s iron ore production was 1.28 billion tonnes in 2016, down by 3% y-o-y. Import was 1.04 billion tonnes, an increase of 7.5% y-o-y, which was a record high and accounted for around 69% of global iron ore trade in the same year.
China’s crude steel demand in 2016 was 710 million tonnes, an increase of 1.2% y-o-y or an increase of 14.45 million tonnes. Crude steel demand in the first two months of 2017 registered 117 million tonnes, an increase of 12.1 million tonnes or 11.49% y-o-y.
CISA expected that steel demand will remain stable in 2017 or decline slightly. The construction sector is expected to benefit from the on-going infrastructure investments and promotion of new urbanization centres in the country. Infrastructure investment (excluding electricity) grew by 27.3% y-o-y in the period January – February 2017. Real estate development, on the other hand, is expected to slow down in 2017.
The automotive industry will also continue to grow in 2017. Automobile production and sales were 4.53 million vehicles and 4.46 million vehicles in the first two months of 2017 respectively, an increase of 11.1% and 8.8% y-o-y.
According to CISA, steel production capacity was cut by 65 million tonnes in 2016 and the target for 2017 production capacity reduction is 50 million tonnes. From government’s structural reform plan, it is expected that net capacity would be reduced by 100-150 million tonnes by 2020.
Speaking at the same event, CRU expected more M&A in China, with industry concentration levels of top 10 producers increasing from 34% to 60% by 2020. Labour productivity, energy consumption and pollution discharge in China’s steel industry will also improve while R&D investment will rise above 1.5%.
According to CRU, China’s production capacity utilization is expected to continue to rise. If the targeted production capacity reduction can be made, CRU projected that capacity utilization would be around 80-85% until 2021.
China’s net export of finished steel and semis is expected to reduce, but the volume will remain high. CRU predicted that net export volume of finished steel will remain at around 60 million tonnes per year from 2017 to 2021. Net export of semis will remain at 10 million tonnes per year during the same period.