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Wu Wenzhang Spoke at 20th Middle East Iron and Steel Conference

https://en.steelhome.com [SteelHome] 2016-12-20 10:00:46

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On December 12-14, Wu Wenzhang, Chairman of Shanghai SteelHome, was invited to deliver a speech at 20th Middle East Iron & Steel Conference, held by Metal Bulletin (MB) in Dubai, UAE. The speech was titled China Drives World Steel Market Price Rally.

Major points of his speech:

I Global steel overcapacity causes: global steel demand decrease and regional supply/demand imbalance

II Chinese governmental de-capacity and infrastructure construction expansion changes global steel supply/demand landscape, which heats up global steel and raw materials prices.

III Falling steel demand in China will continue. In the future, crude steel consumption in China will stabilize at 400-450kg per capita per year. SteelHome predicts that China crude steel consumption in the future will be around 600 mln tons.

IV Outlook for 2017 China Steel Market

1) In 2017, Chinese economic growth will be 6.7-7%, slightly better than 2016. SteelHome predicts that China's crude steel output in 2017 will be around 790 mln tons, down 1.3% yoy; export around 100 mln tons; imports 13 mln tons; apparent consumption of crude steel around 700 mln tons, slightly higher than 2016. In 2017, Chinese steel price will continue to rally, with average one higher than 2016.

2) In 2016: Chinese crude iron ore production is expected to be 1.3 bln tons, down 5.9% yoy; imports 1.0 bln tons, up 5% yoy. In 2017: Chinese crude iron ore production 1.25 bln tons, down 3.8% yoy; imports 1.05 bln tons, up 5% yoy. Iron ore import price in China will be mostly running in the range of 60-80 dollars per ton (CIF, China).

On December 13, Mr.Wu was interviewed by UAE's local TV Al Ghad. The reporter asked: western countries believed that cheap Chinese steel products and poor quality hurt western steel producers. How do you think of it?

Mr.Wu: Yes, China's steel export price was low in 2015, while the price has soared in 2016, and even higher than CIS nations. China's steel market will drive global steel market rally. I suggest you to buy from medium-and-large scaled steel enterprises that produce qualified steel products. What's more, western manufacturing industries using China-sourced steel products could have enhanced competitiveness.

After his speech, Mr. Wu answered the questions from audience.

Q1: How could you explain why Chinese crude steel output remains high when Chinese central government has planned to cut 45 million tons of crude steel capacity in 2016?

Wu: In fact, many private steel producers in China were not included in official data, that's a reason why the combination of annual reports of steelmakers was around 20 million tons higher than official total production. This year, an exposure of all these companies is a reason for perching output.

Q2: We heard that Chinese government is closing down medium frequency induction furnaces and line frequency furnaces. How much will be reduced on yearly basis?

Wu: China will reduce 10 million tons to 15 million tons of backward capacity of induction furnaces annually, which will cause a reduction of 20 million tons of billet/rebar production. I guess, it is hard to offset the shortage in the first half year 2017.

Q3: Does rebar and HRC futures contracts have impact on physical market? As a trader, what should I follow up?

Wu: it has huge impact on spot market as there is a close correlation between futures contracts and physical market. Traders should watch transaction price of most-active contracts and the trend. Now in China, steel contracts in Shanghai Futures Exchange and iron ore/coal contracts in Dalian Commodities Exchange are actively traded by industry participants and investors.

During the conference, Mr.Wu invited audience to participate XIII Steel Development Strategy Conference to be held on April 21-23, 2017 in Shanghai.

On the afternoon of December 15, Mr.Wu visited Mesteel, Dubai-located steel information and commerce service provider, and reached a basic agreement with Mr.Karel Costenoble for cooperation in data, conference and buysell services etc.

 

 

20th Middle East Iron & Steel Conference

 

Mr.Wu delivered a speech titled China Drives World Steel Market Price Rally

Mr.Wu spoke and answered questions from audience

Mr.Wu interviewed by Al Ghad TV

Mr.Wu and

Peter F.Marcus, Managing Partner of World Steel Dynamics

Mr.Wu and Saeed G. Al Remeithi, CEO of

Emirates Steel

Mr.Wu andTom Keller, Senior Commercial Director of Macsteel

SteelHome stand

Ms.Dong Suqi, President Assistant and Tina Tong, Marketing Manager, introducing SteelHome to delegates

SteelHome visited Mesteel

Mr.Wu and Karel Costenoble, GM of Mesteel


(To contact the reporter on this story: tina.tong@steelhome.cn or 86-158 0077 7957)
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