BLOG: China ‘19 steel output shy of 1 billion t milestone
Whatever the measure, at least for this time, few in the market will challenge the accuracy of the NBS statistics.
“The actual production is not too far from what many expected but the result still caught the market by surprise, and it is so alarmingly close to 1 billion tonnes,” a Beijing-based steel analyst commented. After all, Chinese market sources had expected last year’s total crude steel production to reach 970-980 million tonnes, Mysteel Global notes.
Behind the strong rise in the country’s steel output is the robust steel demand, market sources agreed, noting that the property market had performed extremely well last year.
China’s steel output closely co-relates with the property market, which, despite Beijing’s open declaration of no support or even some restraint on the domestic property-sales prices, even the most optimistic soothsayers would not have foreseen performing as strongly as it did. Investment in the sector, for example, soared by 9.9% on year, almost doubling the 5.4% year-on-year increase in the country’s fixed asset investment, the NBS statistics show.
“This was extremely impressive when taking into account the fact that (real estate) is not a sector that the central government favors, and commercial banks, therefore, have shied away from the loan issuance,” the Beijing analyst noted.
But the implications of the steel sector’s achievement still need a little teasing out. For example, still requiring clarity is what the 996 million tonnes record means in terms of the capacity utilization rate of the steel industry. In its report Friday, NBS mentioned that the average capacity use rate among the country’s ferrous smelting and processing sector increased by 2 percentage points on year to 80%, but does this mean China’s total steel capacity is about 1.25 billion tonnes/year?
If that turns out to be the case, where does the extra 200 million t/y suddenly come from? Apparently, there are still many unknown facts in the Chinese steel industry requiring exploration, and the process of unearthing them in 2020 ensures that this year will be anything but dull.
Written by Hongmei Li, li.hongmei@mysteel.com
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