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| August 21, 2001 | atimes.com | ||
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China
China remains steely-eyed BEIJING - China's steel sector has been following an upward trend, with sales of steel products reaching their highest levels in recent years. But pressure on the market from increased imports and decreased exports have led to intense competition and trade protectionism. Thus, analysts say, the market will be mixed in the second half of this year, and the current situation does not bode well for the the construction steel market. China produced 54.924 million tons of steel in the first five months of 2001, an increase of 4.219 million tons or 8.32 percent over the same period of 2000. The output of steel products in the January-May period was 61.578 million tons, an increase of 9.821 million tons, or 18.98 percent, year-on-year. In detail, the output of seamless tube was 2.007 million tons, an increase of 425,100 tons or 26.85 percent; that of welded tube, 2.262 million tons, an increase of 465,000 tons or 25.87 percent; and that of steel strip, 3.725 million tons, an increase of 618,000 tons or 19.88 percent. Large and medium-sized steel enterprises produced 51.857 million tons of steel in the first five months, an increase of 3.745 million tons or 7.78 percent over the same period of 2000; 47.526 million tons of steel products, an increase of 6.248 million tons or 15.14 percent; 1.481 million tons of seamless tube, accounting for 73.79 percent of the country's total such output; 1.84 million tons of strip, accounting for 49.4 percent of the total; 390,000 tons of welded tube, accounting for 17.27 percent of the total. Sales rate of steel products in January-May reached the highest level in recent years. According to official statistics, 55 large steel enterprises produced 42.131 million tons of steel products and sold 42.191 million tons in the first five months of this year, with a sales rate reaching 100.14 percent. The inventories dropped from 2.741 million tons at the beginning of this year to 2.682 million tons at the end of May, enough for 9.6 days' sales. China's steel market assumed a generally upward trend in the first five months of this year. However, increased imports and decreased exports have combined to bring great pressure to bear upon China's steel market. Oversupply on the international steel products market in recent years has triggered fierce competition and trade protectionism. The anti-dumping measures taken by the United States against China HR plates have seriously held up China's exports. According to Customs' statistics, China imported 4.17 million tons of steel products in the first quarter of this year, up 26.8 percent year-on-year. Import of billet went up four-fold to reach more than 2 million tons in the period. In contrast, the country exported only 1.14 million tons of steel products in the first quarter, down 18.1 percent. The plates export dropped 48 percent to 470,000 tons. It is estimated that China's steel exports in the first quarter was 260,000 tons less than planned, but its imports were 880,000 tons more. There were an additional 1.14 million tons of steel on the market. Analysts predict that China's steel market will be mixed in the second half of this year, but the current situation shows that it brooks no optimism in the construction steel market. Up to the present, the high-speed growth of the output of small sections has shown no signs of slowing down. The output was 2.987 million tons in January, 2.888 million tons in February, and 3.417 million tons in March, all higher than the average monthly output of 2.782 million tons in 2000. The prices of medium plates are likely to drop, due to an increase in output, growing inventories, inadequate social demand and a setback in exports. The prices of large and medium sections will remain stable due to big increases in home demand, but the prices for small angle and trough steel will not be optimistic due to big increases in output by numerous small manufacturers. Prices of sheets are likely to go up due to the buoyant international market. The situation of oversupply prevailing on the steel products market at present is unlikely to change at least until the end of this year. Generally speaking, there is not a good environment for the operation of the domestic steel market. On the one hand, the pulling effect of the pro-active fiscal policy is limited, and experts predict that the consumption of steel products will grow only 10 percent this year; on the other hand, the economic growth worldwide is slipping and the year's export of steel products is predicted to be less than 5 million tons. Despite this, it is estimated that China's steel products output will reach 140 million tons and imports will exceed 17 million tons this year. China's market demand for steel products was 115 million tons in 2000 and is likely to top 140 million tons by 2010, according to report filed by the China Metallurgical Information Center. The report predicts big changes in the steel market in the first 10 years of the 21st Century. Steel products, especially crude steel and pig iron, will be in short supply. The report said that it is necessary for the country to adjust its allocation of resources and its product mix. China produced 15.2 percent of the world's steel in 2000 as against 13.02 percent in 1995, according to the National Bureau of Statistics. Meanwhile, the per capita steel output increased from 79 kilograms in 1995 to 100 kg in 2000. Seel output in 2000 was 128.5 million tons, 32.29 million tons or 33.5 percent more than in 1995, overfulfilling the 110-million-ton annual production target the country set for the Ninth Five-Year Plan period (1996-2000). By 2002, China will close all blast furnaces smaller than 100 cubic meters, steel plants producing less than 300,000 tons of carbon steel, and open-train light section mills and wire rod mills with capacity less than 250,000 tons a year. By that time, the number of China's steel plants will be further reduced to 65. The State Economic and Trade Commission has set the 2001-2005 development plans for the metallurgical industry as follows: 1. Market demand: 2. Development objectives 3. Priorities in development 4. Situation in resources Government Policy The State Development Planning Commission (SDPC) and the State Economic and Trade Commission (SETC) published in September 2000 a list of industries and technologies to be encouraged. Such encouragement includes easier and quicker government approval for investment on such projects, preferential taxes, and exemption of customs duties on equipment imports for such projects. In the iron and steel sector, the encouraged technologies are: The government has pledged to cut tariffs on steel imports by an average of 2.51 percent between 1998 and 2005. This will lower the current rate of 10.58 percent to 8.07 percent. The tariff cuts are part of the efforts that China has made for the entry of the World Trade Organization. China has also agreed to remove non-tariff barriers. According to the revised guide catalogue of industries for foreign investment, areas in the ferrous metal industry where foreign investment is encouraged are: Major Players China has 24 leading iron and steel-making enterprises with annual steel output surpassing 1 million tons each. Their combined output accounts for 70 percent of the country's total steel output. Leading Chinese steel makers include Anshan Iron and Steel Company, Baoshan Iron and Steel Group, Shougang Group and Wuhan Iron and Steel Company. The Anshan Steel Group produced a sales revenue of 3.4 billion yuan (US$411.27 million) in the first half of this year, up 21.91 percent year-on-year; a gross profit of 550 million yuan, up 31 percent; and a net profit of 210 million yuan, up 48.91 percent. Wuhan Steel turned out an estimated profit of 478 million yuan in the first half of this year, up more than 30 percent from the same period of 2000. The company plans to produce 6.82 million tons of steel and 6.55 million tons of iron and expects 16.7 billion yuan in sales, including 7.2 billion yuan from non-steel sector this year. Tangshan Steel produced 1.728 million tons of iron, 1.697 million tons of steel and 1.608 million tons of steel products in the first half of this year. (Asia Pulse) |
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