HomeProduct Complimentary download Lower China steel demand growth to pressure iron ore -BaoSteel

Lower China steel demand growth to pressure iron ore -BaoSteel

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Publish time: 13th June, 2013      Source: ChinaCCM
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Growth in China's steel demand is expected to slow to a near standstill in 2013, adding to pressure on iron ore prices after a 17% fall in May.

Head of the country's biggest listed steelmaker said that spot iron ore prices have tumbled to around a seven-month low after poor economic data and fears of weaker steel output sparked concern that prices could fall further in the second half when new mine supplies are expected to come onstream.

Baoshan Iron & Steel Group chairman Mr Xu Lejiang said the company sees China's steel production rising just 1 to 2% in 2013 from a year ago. That compares with a growth rate of 3% in 2012 and average growth of 10% a year between 2006 and 2011.

Mr Xu said that "China's urbanization drive and infrastructure construction is continuing, but at a slower pace than expected. Steel consumption will weaken in the second and third quarter, which will force mills to be more rational in their production plans. That means output growth will slow."

Over hyped expectations of a strong rebound in demand in the second-quarter have led China's army of steel makers to ramp up production since February to record levels.

Producers have also been reluctant to cut output for fear of losing market share, sending China's Jan to April crude steel output up 8.4% from a year ago to 238.1 million tonnes.

The forecast by BaoSteel, whose listed unit is China's biggest steelmaker, means the rate of steel production would have to fall in coming months.