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Low prices to persist in Chinese steel industry

Keywords: Tags  steel, Chinese Steel Home, Wu Wenzhang, Chinese steel industry, Cem Turken

ISTANBUL — Chinese crude steel production is expected to total 800 million tonnes in 2014, up by 2.7 percent year on year, according to Wu Wenzhang, president of Chinese Steel Home.

Net exports are expected to hit 50 million tonnes or higher, and apparent consumption to total 750 million tonnes, up by 3 percent, Wenzhang told delegates Feb. 20 at the 11th Steel Success Strategies conference in Istanbul.

Low prices, poor profitability and low inventory levels are expected to persist, he added.

The average price of common, hot-rolled steel products is expected to be lower in 2014 than in 2013, he said.

China is expected to import 870 million tonnes of iron ore in 2014 with the iron ore import price expected to range from $110 to $140 per tonne, Wenzhang predicted.

Looking ahead, Steel Home forecast that China’s gross domestic product (GDP) will grow by about 7.5 percent in 2014; fixed-asset investment will expand by about 20 percent; export trade will rise by 8 percent; and crude steel demand will be up by 3 percent over 2013 to 750 million tonnes, Wenzhang said.

In 2014, China’s pig iron output is expected to total 730 million tonnes with steel production pegged at 1.11 billion tonnes, he forecast.

Crude iron ore production in 2014 is expected to increase by 3.4 percent year on year to about 1.5 billion tonnes, approaching a record level. Iron ore output by the country’s top four miners will increase by about 100 million tonnes in 2014, while iron ore imports will climb by 50 million tonnes to 870 million tonnes, up by 6.2 percent year on year, he said.

China’s domestic production and supply depend on international iron ore prices. The country’s iron ore import price is expected to fall in the range of $110 to $140 per tonne c.i.f. for most of next year, resulting in an average price of $125 per tonne, Wenzhang added.

In China, trading in the futures markets for steel and steelmaking raw materials (iron ore, coke, coking coal) has increasingly been conducted on the spot market.“I expect that the financial markets will increasingly affect the Chinese steel and raw material markets,” he said.

A version of this article was first publishd in AMM sister publication Steel First.

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