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.
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20th Middle East Iron & Steel Conference |
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Mr.Wu
delivered a speech titled China
Drives World Steel Market Price Rally |
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Mr.Wu
spoke and answered questions
from audience |
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Mr.Wu
interviewed by Al Ghad TV
|
Mr.Wu
and
Peter F.Marcus,
Managing Partner of World Steel Dynamics |
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Mr.Wu
and Saeed G. Al Remeithi, CEO of
Emirates Steel
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Mr.Wu
andTom Keller, Senior Commercial Director of Macsteel
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SteelHome
stand |
Ms.Dong
Suqi, President Assistant and Tina Tong, Marketing Manager, introducing
SteelHome to delegates |
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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) |