Wu
Wenzhang, President of Shanghai SteelHome website, delivered the keynote
speech on 6th
steel Industry Development Strategy and Supply/ Demand Forum hosted by
Steelhome on 23rd-25th April.
New
Concept, New Pattern, New Challenge
Wu
Wenzhang, President, SteelHome website
His
major points are listed below.
First,
to see domestic supply/demand balance in a worldwide perspective.
Second,
China
steel industry has advantages in technology, equipment and scale, and
China
also see growing demand. Therefore, the increase in global steel demand
should continue to be fed by
China
.
Third,
China
steel enterprises are challenged by volatile metallics supply and purchase
price and uncertain steel sales price.
Fourth,
the flourish in steel information industry has already enhanced
transparency of spot market.
Fifth,
the diversified investors in futures trading have varied understandings in
macro economy, government policies and market movement, so the trend of
spot market and futures market will not be the same or similar.
Sixth,
as increasing steel mills and distributing enterprises are involved in
futures trading or e-commerce to hedge,
China
steel market would more often see high inventory.
Seventh,
China
steel demand would keep rising in 2010-2012, and global market would see
temporary shortage of metallics supply.
Wu
answered some hot topics in the conference.
Regarding
the continuous growing iron ore price, Wu gave two reasons: a) the
monopoly of three mines b) global pig iron production break record.
Although Rio Tinto and BHP Billiton’s iron ore production hit historical
high, Vale’s production recovery appears to be slow, and they cannot
meet the fast increase of pig iron production.
Regarding
high inventory in
China
spot market, Wu attributed to the large price spread between spot price
and futures price.
In
2010, flats market would reverse its weak performance as what happened in
2009 due to improved demand in downstream sectors and better export
market.
Wu
presented his points of view of
China
steel market of 2010:
1
Global crude steel demand would attain over 1.39 billion tonnes in 2010.
Global metallics market would see temporarily tight supply and it may
reach supply/demand equilibrium at a high price level.
2
Chinese GDP is expected to grow at least 9 percent in 2010, and the growth
pace would be fast in the first half and slow down in second half.
China
crude steel consumption in 2010 would amount to 600-610 million tonnes, up
12 percent year on year.
3
China
crude steel production is restricted on tight iron ore supply. The iron
ore imports may stand around 680 million tonnes in 2010, up 8.4 percent
year on year.
4
China
crude steel production would be 630 million tonnes in 2010, up 10.9
percent year on year. Net exports of crude steel would be over 20 million
tonnes. The apparent consumption of crude steel in
China
would rise to 606 million tonnes, up 7.3 percent year on year.
5
China
metallics price would remain high in 2010 due to supply shortage.
6
Chinese steel enterprises have great pricing power and they are capable of
passing on higher operation cost.
7
China
steel price level in H2 would be higher than that in H1.
Wu
added before the conference ended that China HRB price may exceed CNY 5000 per tonne in 2010.
|