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Jul.22.2018 1USD=6.7671RMB
  SteelHome >>Steel>>Market Info>>Special Studies
 
Wu Wenzhang Invited to Speak at Steel Success Strategies XXXIII

http://en.steelhome.cn [SteelHome] 2018-07-03 09:50:28

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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):

I Development Course of China Steel Industry in 40 Years of Reform and Opening-up

1. Chinese economic growth drives steel industry.

Average 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.

2. 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 world.

l  China 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.

l  China’s massive imports in steel technology and equipment has brought development opportunity for equipment manufacturing sectors in developed countries in Europe and America etc.

l  Before 2008, China’s imports of second-hand equipment have provided condition for Europe and America etc to solve overcapacity and transfer the capacity.

l  In 21th century, China’s massive imports in iron ore and coking coal etc. have driven exporting shipments and investment of original countries.

3. Chinese government has been implementing supply-side structural reform since 2016, which makes contribution to world’s cutbacks in steel overcapacity.

l  During 2016-2018, China has totally eliminated 150 mln tons of steel capacity and dismantled 162 mln tons of substandard steel (ditiaogang) capacity.

l  Chinese 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.

II China Steel Industry Enters into High-Quality Development

Major Signs: standardization of product, automation of equipment, informationization of operation, intelligence of manufacturing

1. Innovative, Coordinated, Green, Open, Shared’ Five Development Concept will lead economic shift from quantity-based growth to high quality development.

Chinese 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.

SteelHome 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.

2.Chinese 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.

l  Chinese 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.

l  Chinese 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 steel consumption.  

l  Overcapacity 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.

l  China 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.

l  China 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 productivity etc.

3.China 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

1.In 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.

Reasons for production increment in crude steel and steel products:

1) domestic demand (from property and infrastructure construction etc.) kept rapid rise;

2) 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;

3) legal and qualified steelmakers raised capacity utilization rate.

2. In 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.

3.In 2018-2020, Chinese government will focus on “Three Major Battles”, in which “Pollution Prevention Battle” will directly cap the release of steel capacity. 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.  

4. 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.

5. About H2 2018 Chinese steel market:

l  Currently, 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.

l  China-US trade war is the biggest uncertainty impacting 2018 steel market.

l  SteelHome 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, China).

Conclusions

1.     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.

2.     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.

3.     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.

4.     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.

5.     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).

On 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 Dynamics

Mr.Wu took photo with Peter F.Marcus and Mr.Ni Zhijun, GM with Baosteel USA company

The stand of SteelHome website

Delegates interested 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


(To contact the reporter on this story: tina.tong@steelhome.cn or 86-21-50585733)
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