M a r k e t N e w s

China sparks Investment in African steel industry

Posted on : Wednesday, 17th December 2014

 Growth in the steel industry worldwide has stabilised following substantial fluctuations during the recession, but a fair amount of uncertainty remains, particularly as a result of structural change in the Chinese economy, according to WorldSteel Association director-general Edwin Basson.

The global steel industry produced 1.53-billion tons a year and recorded growth of 3.8% in 2013, with 2% growth expected in 2014.
Basson told an Organisation for Economic Cooperation and Development (OECD) workshop, in Cape Town, that structural changes in the Chinese economy would impact on the global steel industry, with investment as a percentage of gross domestic product inChina flattening out in the past two to three years.He said the Chinese government was trying to change the composition of its economy from being investment to consumption-driven.
China had been driving the demand for steel for several years.
China Iron & Steel Association deputy secretary-general Yang Zunqing told about 250 delegates that the Chinese steel price had been decreasing, together with consumption.
“The steel price in China is at its lowest level since October last year, so the financial situation is not very good for the Chinese steel industry.”
He said the performance of many steel sectors, such as automobiles and white goods, appeared to be “very weak” over the past year, while the production of goods such as tractors, cement and tools had slowed down in China.
Zunqing expected the oversupply of crude steel to remain an issue as the Chinese economy was on its way to what he called the “new normal”.
Unstable iron-ore supply, the weak steel price and rising value-added tax were pressures in China’s steel industry.
He said the country was also facing mounting pressure in terms of protecting the environment.
“Chinese factories are facing very heavy pressure in environmental protection, so the export of steel is not a long-term policy. I don’t think it’s sustainable because of the rising demand of domestic markets.
“You will see a fairer market and more regulated trade in China. We do not want steel companies to export too many semi-finishedproducts, as we don’t want to leave the pollution in China,” he told delegates from OECD member countries from around the world.
China, the US and India are the world’s top three producers of steel, followed by Japan, South Korea, Russia and Germany.
The OECD said raw material prices had generally weakened owing to increasing output and weak growth in demand. Steelmaking raw material markets were affected by lacklustre economic news from emerging economies in the beginning of 2014. However, demand from some emerging economies started to show improvement in July 2014.
In a document prepared for the conference, the OECD said the price of important steelmaking raw materials, such as iron-ore, cokingcoal, coke and scrap were currently at substantially lower levels compared with where they stood at the beginning of 2014. Global scrap prices had also declined over the past year.

Source : www.engineeringnews.co.za
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