Steel demand in China, the world’s biggest consumer, may rise by as much as a quarter by 2015 compared with demand last year, according to a projection from the China Iron & Steel Association (CISA), which represents producers.
Consumption may increase between 12 percent and 25 percent from last year to as much as 750 million tonnes in 2015, Luo Bingsheng (羅冰生), deputy party secretary of the association, said at a conference in Shanghai yesterday.
In the past 30 years, China’s economy has expanded on average by 10 percent a year as it overhauled state-owned companies and allowed more foreign investment, boosting demand for commodities from iron ore to copper and coal. Iron ore is the principal raw material used to make steel.
China’s steel production this year will exceed 680 million tonnes, Li Xinchuang (李新創), CISA deputy secretary-general, said at the conference yesterday. That estimate is based on a forecast that China’s economy will grow by more than 9 percent, he said.
CISA has suggested that the Shanghai Futures Exchange list futures for medium-to-thick steel strips so producers and users can hedge price risks, Luo said, without elaborating. About 43 percent of the steel that’s made in China is distributed by traders, which make prices more volatile, he said.
The pace of growth in China’s steel demand may ease to 2.6 percent from 4.6 percent annually through 2015 as the economy slows, the association said last month. China’s apparent steel consumption, which includes metal for stockpiles, averaged 17 percent a year from 2006 to last year, according to Bloomberg calculations based on figures from the CISA’s Web site.
The aggregate profit at China’s 77 largest steelmakers fell 2.1 percent to 32.9 billion yuan (US$5.1 billion) in the first four months of this year from a year ago, Luo said.
The average margin was only 2.9 percent because of high raw-material costs, Luo said.