CONF: China's steel market stable in Q1, outlook better
Addressing delegates attending the Singapore Iron Ore Forum that kicked off on May 17, Qi acknowledged that Chinese steel production and consumption during this year's first quarter were at low levels compared with the high base of 2021 but was confident that central government economic support policies would help these improve, going forward. Qi was presenting CISA's analysis of China's steel industry and the association's outlook for the rest of this year.
The slow-down in both Chinese steel supply and demand witnessed earlier this year can be attributed to many factors, Qi suggested, including China's COVID-induced disruptions, the country's hosting of major events such as the Winter Olympic and Paralympic Games, the convening of the "Two Sessions" political meetings in and around Beijing in early March, the traditional winter heating season output curtailments, and global geopolitical tensions.
"In particular, demand from China's property sector remained dull, and the growth from key steel-consuming manufacturing sectors became stagnated," Qi said. He added that among all major steel end-users, only the infrastructure sector enjoyed marked on-year growth in investment over January-March.
In tandem with tepid steel demand, China also saw reductions in steel supply in Q1. According to Qi, China produced about 201 million tonnes of pig iron over January-March, lower by 11% or 24.8 million tonnes on year, while crude steel output totaled around 243 million tonnes, down by 10.5% or 28.6 million tonnes on year.
On the other hand, China produced some 255.6 million tonnes of run-of-mine (ROM) iron ore in Q1, surging by 8.6% or 21 million tonnes on year, Qi noted.
The overall supply-demand balance for steel saw major steel prices across China rise modestly during the first three months, while prices of key steelmaking raw materials including iron ore, steel scrap, coke and coking coal all surged to their recent highs, according to Qi.
Brighter steel market outlook in the months ahead
Regarding China's near-term steel market outlook, Qi anticipated that "under the country's keynote of realizing steady economic growth with related stimulus policies being stepped up, the country's overall steel demand now presently suppressed will pick up once the COVID-19 outbreak is brought under control."
China's central government has targeted gross domestic product growth for this year of around 5.5% on year, as reported.
Among the proactive fiscal policies aimed at boosting economic growth, China plans to issue a total of Yuan 3.65 trillion ($573 billion) in new special-purpose bonds to local governments this year while continuing to boost the development of the domestic infrastructure sector, Qi said by way of example, citing this year's government work report.
"Due to the underperformance of some domestic sectors in Q1 and the continuing challenges amid COVID-related disruptions and geopolitical tensions, the Chinese government will be more determined to achieve steady economic development by exerting greater efforts," Qi suggested to delegates.
In the longer term, China's steel industry will continue to focus on high-quality development through stable supplies, reasonable industrial structure, advanced steelmaking technology and facilities, and high-quality products to enhance its global competitiveness and to achieve low-carbon, sustainable goals by 2025, Qi concluded.
Written by Vivian Yang, yangzhenqi@mysteel.com, and Lea Li, liye@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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