|
|
|
|
China's steel industry set for
tough times
BEIJING - As
prices of steel products in China have fallen
since March, experts expect the year 2005 to be
the start of a temporary low ebb for the steel
industry, mainly due to the state's macroeconomic
cooling measures and market forces.
Song
Jijun, vice-chairman of the Hebei Iron and Steel
Association, believes that the macroeconomic
policy, which is determined by GDP and investment
growth rate, is the key to the pending slowdown of
the steel industry.
Excessive fixed assets
investment, manifested by GDP growth of 9.5% in
the first quarter on 25.7% growth of fixed capital
investment in the first four months, has induced
such macroeconomic control policies as prohibiting
the steel industry from blindly expanding
production capacity; calling off export rebates
for billet, steel ingot and pig iron; and passing
regulations on the development of the steel
industry. The macroeconomic policies on steel
industry will lead to more pressures on the
domestic market.
Some steel operators
believe that the production capacity of steel
industry is expected to face an oversupply. As
against 2002 and 2003, in which the steel market
enjoyed more demand, the year 2004 saw an increase
of 22.69% in steel production to 272.8 million
tons. The increase will top 50 million tons in
2005, as marked by a net increase of 22.39% or 15
million tons in the first quarter. It is also
anticipated that 2006 will add another 50 million
tons of production capacity. The trend of steel
oversupply will lead to more supplies and
narrowing profits.
In addition, the
supply/demand relationships between steel industry
and downstream industries are experiencing
dramatic change. According to statistics, the
first four months of this year witnessed the
production of 28.0858 million tons of crude steel,
up 25.4% year on year, and 29.5309 million tons of
steel products, up 23.7% year on year. But the
consumption of steel in downstream industries grew
slowly; the automotive industry, a main plate
consumer, only had a 1.48% output growth in the
corresponding period.
International and
domestic economic environments also contribute to
the fluctuating trend of the domestic steel
industry. China's economic growth is expected to
slow down in the three years from 2005 to 2007,
following a cycle of rapid growth from 7.5% in
2001, to 8% in 2002, 9.3% in 2003 and 9.5% in
2004.
(Asia
Pulse/XIC) |
|
|
|
|
|
|
|
 |
|
|
|
|
|
All material on this
website is copyright and may not be republished in any form without written
permission.
© Copyright 1999 - 2005 Asia Times
Online Ltd.
|
|
Head
Office: Rm 202, Hau Fook Mansion, No. 8 Hau Fook St., Kowloon, Hong
Kong
Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
|
|
|
|
