Post-Quake Reconstruction Unlikely to Boost Steel Demand-Shanghai Metals Market

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Post-Quake Reconstruction Unlikely to Boost Steel Demand

Industry News 03:56:39PM Apr 24, 2013 Source:SMM
SHANGHAI, Apr. 24 (SMM) – A 7.0-magnitude earthquake hit Ya'an city in southwest China's Sichuan Province on April 20, with some 670,000 houses damaged and 12,850 houses toppled as of April 23. More than 99% of houses in Longmen area of Lushan county were damaged. In addition, 34 reservoirs and 2,668 drains in the city were also broken. Shares of steel companies in southwest China showed noticeable growth with investors expecting steel demand to be lifted by the post-quake reconstruction. However, Steelease believes this will unlikely boost actual steel demand for the following reasons:
 
First, the losses caused by Ya’an earthquake were well below those resulting from the Wenchuan earthquake. Ya’an, which reported the worst economic loss, contributes less than 2% of Sichuan’s economic output and 0.07% of the national total, and most of Sichuan’s 91 listed companies in A-share market reported they were not greatly affected by the earthquake. 
 
Second, Steelease understands that most of buildings damaged or collapsed in the quake were brick houses, with only a few reinforce concrete buildings affected. It was reported that no building in the downtown area of Ya’an city collapsed. Thus, the steel demand used for rebuilding the fallen brick houses is limited. 
 
Finally, as the post-quake reconstruction will take one or two years, steel demand will not show rapid growth in a short term.
 
Steelease expects the makeshift houses built in the quake-hit areas will help push up demand for color coated plate and coil and hot-rolled steel, but the post-quake reconstruction will not lead to sharp increase in steel demand.
 
The comparison of losses caused by earthquakes in Wenchuan and Ya’an are listed below:
 
Collapsed Houses
Damaged Houses
Direct Loss (RMB)
Proportion to GDP
Wenchuan
5.36 million
21.43 million
845.1 billion
3%
Ya’an
12,850
670,000
10 billion (E)
0.02% (E)

Post-Quake Reconstruction Unlikely to Boost Steel Demand

Industry News 03:56:39PM Apr 24, 2013 Source:SMM
SHANGHAI, Apr. 24 (SMM) – A 7.0-magnitude earthquake hit Ya'an city in southwest China's Sichuan Province on April 20, with some 670,000 houses damaged and 12,850 houses toppled as of April 23. More than 99% of houses in Longmen area of Lushan county were damaged. In addition, 34 reservoirs and 2,668 drains in the city were also broken. Shares of steel companies in southwest China showed noticeable growth with investors expecting steel demand to be lifted by the post-quake reconstruction. However, Steelease believes this will unlikely boost actual steel demand for the following reasons:
 
First, the losses caused by Ya’an earthquake were well below those resulting from the Wenchuan earthquake. Ya’an, which reported the worst economic loss, contributes less than 2% of Sichuan’s economic output and 0.07% of the national total, and most of Sichuan’s 91 listed companies in A-share market reported they were not greatly affected by the earthquake. 
 
Second, Steelease understands that most of buildings damaged or collapsed in the quake were brick houses, with only a few reinforce concrete buildings affected. It was reported that no building in the downtown area of Ya’an city collapsed. Thus, the steel demand used for rebuilding the fallen brick houses is limited. 
 
Finally, as the post-quake reconstruction will take one or two years, steel demand will not show rapid growth in a short term.
 
Steelease expects the makeshift houses built in the quake-hit areas will help push up demand for color coated plate and coil and hot-rolled steel, but the post-quake reconstruction will not lead to sharp increase in steel demand.
 
The comparison of losses caused by earthquakes in Wenchuan and Ya’an are listed below:
 
Collapsed Houses
Damaged Houses
Direct Loss (RMB)
Proportion to GDP
Wenchuan
5.36 million
21.43 million
845.1 billion
3%
Ya’an
12,850
670,000
10 billion (E)
0.02% (E)