Day One 12 November 2018
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?
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.
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
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.
What is your view on the new rebar standards in China requiring
increased vanadium usage? Will these standards be enforced?
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
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?
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
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.
is your expectation for Chinese steel exports in 2019?
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.