Capesize

17950

Sep-17
0.00 0.00%

Panamax

11175

Sep-17
225.00 2.05%

Iron Ore

76.5

Sep-17
0.85 1.12%

Sing 380

278.25

Oct-17

Coking Coal

208

Sep-17
0.00 0.00%

Nola Urea

212.5

Sep-17
0.00 0.00%

Greener, better and stronger for Chinese ferrous market


China Steel summit 2017

China’s ferrous market is undergoing changes as the supply-side reforms roll on. Some of the new trends are identified in the recent China Steel Raw Materials & Fuels Summit 2017 held in Guiyang, China over November 1-3, 2017.

Overall, the trade participants agreed that the supply-side reforms have altered the industry into a better platform for future development ahead.

“Supply-side structural reform and overcapacity reduction are the best news for steel and its upstream markets.” said Wang Liqun, the vice president of China Iron and Steel Association.

In his opinion, the supply-side reform allowed the steel market to tap into much wider potential and improve management which resulted an orderly price growth seen in this year. Moreover, macro-economy and downstream demand have responded favourable and supported the steel and raw material market well.

Despite the good support, there are still hindrances to a successful supply-side reform like high operating costs, owing to the impacts of factors such as location, environment, and policies, as identified by Xia Chaokai, the vice general manager of Shougang Group Shuicheng Iron & Steel Group.

Going forward, the summit believed that the Chinese government will continue the policy of reducing steel capacity as being laid out in the recent 19th National Congress. After its completion, the government will focus on the development of real economy as well as improve the quality of steel supply.

Over the long term, the Chinese policymakers sought for quality development of steel industry growing at a sustainable manner. In this growth, the market forces are to operating at more standard and orderly pace to open up new opportunities for private companies to ensure industrial competitiveness.

In the pursuit of a more sustainable growth, Jane Zhao, director of Iron ore Department from Vale highlighted the need to build a “cleaner, more efficient and greener steel industry” in China. She envisioned that after the supply reforms, the steel mills will be more efficient and compliant with industry standards in order to survive in the market.

With the deepening of the supply-side reforms, Hu Yanping, the General Manager Assistant of Custeel believed that the ferrous market will enter a “New Era” with new arrangement of market structures that determine market directions.

In this “New Era”, the steel products will occupy the first place, followed by coking coal and coke at the second place and then by iron ore.

“All these marked the comprehensive vitalization of a “New Era” for the steel industry,” opined Hu.

To her, this setting is made possible by the deepening reform on the supply side and the imbalance of steel products. Then after the entire prohibition of substandard steel, she noted that the actual output in Q1-Q3 dropped by 2.3%, while iron ore supply volume increased by around 20%.

For 2018, Hu foresees a higher steel supply against lower demand in the market. In terms of demand, she identified construction, especially the real estate industry, plays the most important role in steel consumption.

“In 2018, China’s infrastructure construction industry may keep at a high growth rate. However, due to the large investment volume, it is hard to see any breakout growth as predicted.” she commented.

Another demand growth will be seen in the car industry, as car ownership has reached 148 or so among 1000 Chinese, which is considered at a low level. Thus, Hu expected the China’s car production is probably to see a slightly rise in 2018.

However, the supply of iron ore has continued to increase as international mines have kept increasing their production into 2018. On the contrary, China’s domestic ore production is estimated to decrease in the new year, as end-users prefer to import seaborne higher grade ores.

“In 2018, China’s supply of steel industry will go up slightly with demand dropping slightly in stabilization.” Hu concluded.