CISA forecasts huge breakdown in steel sector demand growth and prices

By Anil Mathews (ScrapMonster Author)
November 06, 2015 02:39:25 AM
CISA has predicted sharp decline in Chinese crude steel production, amidst huge fall in demand and prices.CISA forecasts huge breakdown in steel sector demand growth and prices
BEIJING (Scrap Monster): The China Iron & Steel Association (CISA) has predicted sharp fall in the country’s crude steel production. The steel sector demand is expected to slow down and prices are likely to remain subdued. The Association predicts Chinese steel sector output to total 780 million tonnes by 2020. The estimates were provided during an industry conference held in Beijing recently.

CISA notes that steel prices have hit their lowest levels in the past two decades. The steel consumption by the country registered a decline for the first time in over three decades in 2014. The apparent steel consumption by the country has dropped by 3.4% to 738.3 million tonnes during the year. Also, the consumption during the initial nine-month period of the current year has registered further drop by 5.8%. The country’s steel consumption during January to September this year has declined to 533 million tonnes.

On the other hand, top iron ore miners including Rio Tinto and BHP Billiton expects higher steel production by the country. On that assumption, they have expanded their output too. BHP expects Chinese steel output to register moderate growth during the next decade. It expects Chinese steel production to peak between 935 and 985 million tonnes during mid-2020.

The sharp drop in steel demand, rising costs of production and tighter credit norms have led to cut in output by many Chinese smelters during recent times. The smelters, especially in the Northern provinces, are likely to announce even sharper production cuts during the next few months. The suspension of operations by state-owned Anshan Iron & Steel Group at some of its blast furnaces may curtail Chinese steel output in the upcoming months.

Meantime, the official data released recently by the Association indicates that listed Chinese iron and steel companies have plunged to heavy losses during the nine-month period of the current year. 23 out of the 35 listed steelmakers have reported losses during the nine-month period from January to September this year.