On June 25-27, 2018, New York time,
Steel Success Strategies XXXIII is held jointly by World Steel Dynamics (WSD)
and American Metal Market (AMM) at New York Marriott Hotel. Mr. Wu
Wenzhang, Chairmen & President of Shanghai SteelHome Website, GM of
China Commodity Website was invited to attend the conference and delivered
a speech titled as China
Steel Industry Enters into High-Quality Development Stage &Analysis
and Forecast on China Steel Market in Three years.
Mr. Wu’s key points in the speech are
(VIP subscribers of SteelHome can contact Tina for full presentation):
Development Course of China Steel Industry in 40 Years of Reform and
Chinese economic growth drives steel industry.
annual growth rate of both Chinese GDP and crude steel output during
1978-2017 was 9.5%. Chinese steel industry basically meets domestic
demand. Around 90% of steel is
consumed in domestic market.
China steel industry pushes global steel industry to steadily move
forward. World crude steel output increased 975.2 mln tons or 136.6% from
1978’s 713.8 mln tons to 1,689 mln tons in 2017. Chinese crude steel
output increased 800 mln tons or 25 times from 1978’s 31.8 mln tons to
831.7 mln tons in 2017. The increment in China accounted for 82% of the
world. Current crude steel production in China takes around 50% of the
before 2005 imported a large amount of steel to satisfy domestic demand.
China cumulatively imported 446.26 mln tons of finished and semi-finished
steel products during 1978-2005, which accounted for 15.9% of the crude
steel production in the period.
massive imports in steel technology and equipment has brought development
opportunity for equipment manufacturing sectors in developed countries in
Europe and America etc.
2008, China’s imports of second-hand equipment have provided condition
for Europe and America etc to solve overcapacity and transfer the
21th century, China’s massive imports in iron ore and coking coal etc.
have driven exporting shipments and investment of original countries.
Chinese government has been implementing supply-side structural reform
since 2016, which makes contribution to world’s cutbacks in steel
2016-2018, China has totally eliminated 150 mln tons of steel capacity and
dismantled 162 mln tons of substandard steel (ditiaogang) capacity.
steel capacity utilization rate has greatly increased; steel
enterprises’ economic benefit has obviously improved; Chinese domestic
steel price soared sharply. The improvement leads international steel
price to sharply rise.
China Steel Industry Enters into
Signs: standardization of product, automation of equipment,
informationization of operation, intelligence of manufacturing
Innovative, Coordinated, Green, Open, Shared’ Five Development Concept
will lead economic shift from quantity-based growth to high quality
economic development target: 1) to build a well-off society in all aspects
by 2020; 2) to basically realize socialist modernization by 2035; 3) to
build a prosperous, democratic, civilized, harmonious and beautiful
socialist modern strong country by 2050.
predicts that Chinese economic growth will be 6.5% in 2018-2020, 5-6% in
2021-2035, and 3.0-4.5% in 2036-2050.
steel industry’s development will continue to meet domestic demand in
the future, and steel export will be controlled within 15% of crude steel
production in long run.
steel consumption has walked into peak area, and will sustain the level
and then head down in the future. The consumption is expected to fall to
680 mln tons by 2035, and end up with 550-600 mln tons by 2050.
steel consumption structure will change in the future: construction-used
steel consumption will step down, and manufacturing industry-used
consumption will keep stable or increase slightly. Infrastructure
construction and manufacturing industry will be driving forces for Chinese
in China steel industry will still exist for long run. The capacity will
be falling by the means of replacement, mergers & acquisitions and
international capacity cooperation. It
is predicted that China’s steel capacity will fall from current 1.0 bln
tons to 0.8 bln tons or lower by 2035.
EAF-based mills share in the future may increase, and demand for iron ore
will fall down. China steel industry’s capacity structure and industry
layout will be further optimized.
steel industry will expand the investment into environmental protection,
energy-saving, quality and technology. In the future, the industry will
realize international level in the aspects of technology and equipment,
product quality, technical standard, energy consumption and labor
will build international capacity cooperation mechanism with ‘One Belt
One Road’ alongside countries, and jointly build a value community of
steel industry chain with these countries and regions.
III Analysis and Forecast
on 2018-2020 China Steel Market
Jan-May 2018, China produced 369.86 mln tons of crude steel and 434.67 mln
tons of steel products, up 5.4% and 6.2% yoy; imported 5.63 mln tons of
steel, down 0.7% yoy; and exported 28.49 mln tons of steel, down 16.3% yoy.
Apparent consumption of crude steel and steel products was 346.11 mln tons
and 411.81 mln tons, up 7.9% and 8.1% yoy.
for production increment in crude steel and steel products:
domestic demand (from property and infrastructure construction etc.) kept
after substandard steel (ditiaogang) capacity was closed, part of EAF-based
mills which are excluded in crude steel output statistics start to
calculate crude steel production;
legal and qualified steelmakers raised capacity utilization rate.
coming three years, Chinese economic growth will keep steadily rising
pace. SteelHome predicts that Chinese economic growth will be around 6.8%
in 2018, and around 6.5% in 2019-2020.
2018-2020, Chinese government will focus on “Three Major Battles”, in
which “Pollution Prevention Battle” will directly cap the release of
SteelHome predicts that in 2018 China’s crude steel production will be
around 870 mln tons; steel exports will sustain at 75 mln tons; in 2019
and 2020, China’s crude steel production will fall to 850 mln tons and
840 mln tons; annual steel exports will be in the range of 60-70 mln tons.
SteelHome predicts that in 2018, China’s annual crude iron ore
production will be around 1.2 bln tons; annual imports will be in the
range of 1.07-1.08 bln tons.
About H2 2018 Chinese steel market:
Chinese domestic steel price is running at high level, steel inventory
keeps falling, steel export has slightly rallied. Lofty inventories of
imported iron ore at China main ports sustain, and iron ore price is
fluctuating. It is hard for iron ore price to trend up.
trade war is the biggest uncertainty impacting 2018 steel market.
forecasts that China’s common HR steel products prices in 2018 will
average 3500-4500 RMB/t (545-700 US dollars/t); iron ore import price
delivered to China (62%) will be in the range of 60-80 dollars/t (CFR,
Since 40 years of Reform
and Opening-up, China has been an important driver for pushing global
steel industry, and has made active contribution on global steel industry.
In the recent three years, China’s steel de-capacity move has once again
made active contribution on global steel industry.
In the future, China steel
industry will enter into high-quality development, and will transform and
upgrade from quantity-based growth to quality benefit, green environmental
protection and steel industry chain value community development.
Chinese steel industry’s
development will continue to meet domestic demand in the future. China
will have 680 mln tons crude steel consumption and 800 mln tons of
capacity by 2035.
China EAF-based mills
share in the future may increase, demand for iron ore will fall down, and
oversupply of global iron ore will hardly change.
SteelHome predicts that in
2018, China’s crude steel production will maintain 870 mln tons,
China’s annual crude iron ore production will be around 1.2 bln tons;
annual imports will be in the range of 1.07-1.08 bln tons. China’s
common HR steel products prices in 2018 will average 3500-4500 RMB/t
(545-700 US dollars/t); iron ore import price will be in the range of
60-80 dollars/t (CFR, China).
25 June, Mr.Wu visited Mr.Raju Daswani, President of American Metal Market
and CEO of Metal Bulletin. On the afternoon of June 27, Mr.Wu was invited
to visit marketsite of Nasdaq.
Glance of conference
Mr.Wu was speaking
Mr.Wu answered the
questions from audience
Mr.Wu attended Panel
V: China & Developing World: Colossus versus the Lilliputians
Mr.Wu discussing the
market with Peter F.Marcus, Managing Partner with World Steel
Mr.Wu took photo with
Peter F.Marcus and Mr.Ni Zhijun, GM with Baosteel USA company
The stand of SteelHome
in SteelHome data, report and steelmaker distribution map
Mr.Wu discussing the
copperation with Raju Daswani, President with AMM
Mr.Wu and Kevin
Kennedy, Vice President with Nasdaq, Steve Sladoje, COO with NFX and
Mike Frawley, CEO with WSEM