China’s crude steel production reached 717Mt in 2012, a record high and a 3.1% year-on-year growth, according to the National Bureau of Statistics. But this marked the lowest rate of growth of crude steel production in the past 10 years. The World Steel Association said China’s share of world crude steel production increased to 46.3% in 2012 from 45.4% in 2011.

The full year growth rate was far lower than the 8.9% in 2011, 9.26% in 2010 and 16-27% in the 2003- 2007 period. China’s crude steel output in December 2012 amounted to 57.66Mt, up 7.7% from a year earlier. The figure was 2.9% down from the previous month, the lowest monthly growth last year. Daily output of crude steel in December dropped 2.9% from November’s 1.916Mt to 1.86Mt.

China’s large- and medium-sized steelmakers were estimated to have broken even for the whole year of 2012, said Wang Haiqing, head of the China Iron and Steel Association (CISA ).

About 80 large- and mid-sized steelmakers monitored by the CISA posted combined profits of RMB 3.281bn (US$526.5M) on total revenues of RMB 301.6bn ($48.39bn) in November 2012. Despite gains in November, the country’s major steelmakers incurred losses of RMB 1.97bn ($316.1M) accumulatively in the first 11 months of 2012, according to the CISA. The number of companies incurring losses dropped from 21 to 20 with losses at RMB 2.38bn ($381.9bn) in November last year. Major steel makers ended the losses for four consecutive months in October and continued to make profit in November due to low iron ore prices.

It is expected that China’s iron and steel industry would see a decrease in profits for December last year as iron ore prices surged while steel prices only rose slightly.

The recovery of the macro-economy in 2013 is expected to help improve steel demand. In the light of this, the domestic steel industry is likely to see a turnaround from losses to breakeven this year. However, it was unlikely the whole industry would recover as the issue of over-capacity remained unsolved and oversupply was still a problem.

The slowdown in the growth rate is expected to bring down the price of iron ore in 2013.

Source: China Metals e-mail