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Wu Wenzhang Invited to 34th International Ferroalloys Conference

http://en.steelhome.cn [SteelHome] 2018-11-13 15:04:52

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12 November, Lisbon

Day One 12 November 2018  

12:00 Executive Interviews with Ferroalloys Leaders

For  Mr.Wenzhang Wu, Chairman and President, Shanghai SteelHome

Q1: We have been hearing predictions for many years now that Chinese steel production is peaking.  Will Chinese crude steel production peak in 2018? In 2019? Why or why not?  What is your view on the outlook for Chinese steel production?

Wu: SteelHome predicts that Chinese crude steel production in 2018 may break 900 million tons and reach 920 million tons, a historic record. For production of steel products, it was 1.125 billion tons in 2014, 1.124 billion tons in 2015, 1.138 billion tons in 2016, and 1.048 billion tons in 2017. SteelHome predicts that it will be 1.060 billion tons in 2018. The production of steel products will not hit the record high because of the different statistical source which also arouse the misunderstanding why crude steel production in 2017 and 2018 soars sharply.

Being well-known, Chinese steel industry has been entering a fast-growing pattern since this century, especially private-owned steel producers who, due to historical reason, used to report their output of finished steel products instead of not reporting or missing the report of middle product (crude steel), even substandard steel output. However, in recent two years, these data are asked to be reported, which was reflected by the sharp rise in Chinese crude steel production and decline in steel products output. Of course, the reduction on duplicated-calculation of processed steel products.

Therefore, I believe that Chinese crude steel production has reached the peak in 2014, and has been fluctuating with ups and downs around the peak range. SteelHome predicts that Chinese crude steel production in 2019 will be around 920 million tons, almost flat with 2018. It is expected that Chinese domestic crude steel consumption in coming five years will be steadily moving or slightly falling off; crude steel production will be determined by the demand from international market for China’s steel exports.

Q2: China has experienced a slowdown in economic growth in recent months. How is this affecting the steel industry? Do you expect to see additional government stimulus?  Will this influence Chinese steel consumption?

Wu: The slow-down of economic growth in recent months has had direct impact on steel industry or had little effect on it, as we can see that Chinese domestic steel market was featured with strong production and sales performance in steel producers, continuous improvement in economic benefits and falling market inventory in the first three quarters when in fact China’s steel export decreased. Currently, Chinese steel price is falling while market inventory remains low.

I think that Chinese government will continue insisting the basic tone of “Seeking Progress While Maintaining Stability”, conduct the work from the aspects of “Stable Employment, Stable Finance, Stable Foreign Trade, Stable Foreign Capital, Stable Investment, Stable Expectation” etc. in a bid to keep a steadily healthy development in economy. As for “Stable Investment”, the move to avoid the continuous drop in fixed assets investment will have a direct impact in steel consumption.

Q3: What is your view on the new rebar standards in China requiring increased vanadium usage?  Will these standards be enforced?

Wu: China’s implementation of new rebar standard is the inevitable option as the country is seeking the transferring development from high-speed to high quality. The move is also one of the concrete measures of five strict standards (safety, environmental protection, energy consumption, quality and technology) highlighted for supply-side reform. The new standard of rebar will be absolutely efficiently implemented. And concerned government departments in the future will even conduct the quality supervision to make sure the quality of rebar meets new standard.

Q4What is your view on environmental closures for steel mills and ferro-alloy production facilities in the winter season this year?  Do you expect closures on a par with last year?  Or more or less?  Do you expect to see any shortages of steel or ferro-alloys?

Wu: Firstly, the production reduction this winter is different from the requirement in last year when all the producers were asked to cut output. This year, the government conducts a “Differentiated” policy in which mills or ferroalloy producers meeting environmental protection standard don’t need to limit production or could just cut part of production, however those unqualified producers will be asked to implement strict production cutbacks. Anyway, the daily production of steel and ferroalloy this winter will be obviously lower than regular months.

Secondly, there will be no shortage even closures could be as strict as last year, because winter is the traditional weak-consumption season for Chinese steel market.

Thirdly, the price skyrocketing at the end of 2017, fired by rush construction projects to meet deadlines and robust market expectation, will not happen again this year. The recent correction in Chinese domestic steel market price is more favorable for a steadily healthy movement in the spring of 2019.

Q5What is your expectation for Chinese steel exports in 2019?

Wu: China has cumulatively exported 58.41 million tons of steel in the first ten months, down 9.3 percent on year. SteelHome predicts that Chinese steel export in 2018 will be around 70 million tons, down 7.2 percent on year. In 2019, the export may be slightly rising with annual export of 72 million tons to 73 million tons, on the recovery of global economy.


(To contact the reporter on this story: molly.shi@steelhome.cn or 86-21-50585358)
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