Crude steel output in China saw a rise of just 4.6% year-on-year to 139.29Mt in the first two months of 2012, with the average daily output at 2.32Mt, according to a statement of the National Bureau of Statistics (NBS) on March 9. This is approximately half the average growth rate of 09-10 (9.2%) which itself was a drop from the double digit growth in recent years (08-09 14.6%; 06-07 16.7%; 05-06 18.6% – the exception being 07-08 as a result of the global crisis when growth fell to 2.2%).

The China Iron and Steel Association (CISA), for its part, come up with a daily output some 540kt (24%) below the NBS value saying that the country continued with a lower level of output in February averaging 1.6962Mt of crude steel a day that month. Although this is a little higher than the January average it is the fourth consecutive month in which daily production has been below 1.7Mt, compared to the 1.9Mt daily average in mid 2011.

CISA, daily crude steel output is based on reports from its member enterprises, namely the 76 large and medium-sized steel mills in the country, which stood at 1. 5472Mt in the February 21-29 period, down 1.32% from the proceeding ten days.

According to NBS, China’s steel demand is forecast to continue to subside this year due to an expected domestic slowdown and faltering global economic recovery.

CISA believe China’s crude steel consumption is expected to hit 690Mt this year, while its output is expected to rise by 7% to reach 730Mt, according to a statement posted on the website of the Ministry of Industry and Information on March 2.

The steel analysts, CRU, say, in the period 2000 -2010 the CAGR for steel consumption was 18% but its forecasts to 2015 expect this to fall to 6%, similar that in the period 1994-2000.

CISA expects the highest point for steel prices in 2012 will be lower than that of 2011, and that prices may rebound in the second half of the year after experiencing a downward in the first half.

It is worthwhile to note that the construction steel stocks in 29 key cities currently have reached 11.06Mt, up 4.11Mt or 59% from those before the Spring Festival. In addition, the construction steel stocks in Beijing amounted to 949kt, hitting a 12-year record high.

Source: China Metals e-mail