COMPANY PRODUCT INQUIRY INFORMATION COMMUNITY NEWS Welcome to Wanjoo Metals       HOME > CUSTOMER CENTER > NEWS TITLE  China Steel Output Down but Not Out WRITER   administrator DATE   2013-12-11 18:15:14 By CHUIN-WEI YAP China’s production of crude steel in November fell to its lowest monthly volume this year. The decline is partly due to seasonal factors but also comes as the government is taking steps to curb overcapacity in the sector. The country makes nearly half the world’s steel, and its output of the metal is a bellwether for industrial demand and affects global prices for iron ore, which is used in steel production. Chinese mills last month produced 60.9 million metric tons, a 6.5% decline from October to the lowest monthly level since December last year, the National Statistics Bureau said Tuesday. Partly the decline is explained by slower construction of buildings and other projects in the winter months, reducing demand for steel, said Vaseem Karbhari, analyst with data provider The Steel Index. China’s steel mills, though, are facing other challenges. Policy makers want to shift the nation’s growth model away from one led by investment, which creates construction projects that tap on heavy industry like steel mills, to one that fosters more domestic consumption and local innovation. Last month, the government announced fresh edicts aimed at downsizing the steel sector, including an extension of a moratorium on building new capacity. “With environmental policy tightening in some areas, some steel mills have begun to halt production,” the China Iron and Steel Association said in a report Monday. Authorities also have been closing steel makers, including one mill in northern Hebei province in November, as the government has been trying to cut down the size of the steel industry to control pollution, among other goals. In the longer-run, some analysts expect this trend to lead to lower demand for iron ore and other inputs for steel production. “As China shifts from an investment-driven economy towards a more consumer-led one, long-term demand growth for metals is expected to slow down,” Singapore-based Fitch Ratings director Suaik Lim said. Still, some observers say it’s too early for the change of tack to have affected steel producers in a big way. Platts, a commodity price and news provider, said the shuttered Hebei facility produced less than 7 million metric tons a year from a total nationwide estimated output of 1 billion metric tons per year. Platts said it was unlikely efforts to curb overcapacity in the steel-making sector would show any progress in 2014. Despite November’s decline, China steel output in 2013 is still likely to top last year’s 716.5 million tons for a record-high annual volume. Output in the first 11 months reached 713 million tons, buoyed by a strong third quarter. Beijing continues to rely on stimulus spending on infrastructure to boost economic growth, which has underpinned demand for steel and iron ore. In November, China imported 77.8 million tons of iron ore, much of it from Brazil and Australia, a record monthly total. Mills typically stockpile iron ore at the end of the year, as output from domestic mines slow due to freezing weather. That has helped iron ore prices recover from a slump earlier this year. The strong imports also came after authorities in the summer made it easier for companies to import iron ore. Sixty-eight new importers joined in the trading since new measures took effect in July, the China Iron and Steel Association said Monday. The previous system limited imports to just 118 license holders. Of course, a tilt away from heavy industry is likely to lead to slower overall growth for China – with big implications for steel and iron ore. But that should take time. [ L I S T ] WanJoo Metals All rights reserved. TEL : +82-2-585-2581, 2571,   FAX : +82-2-585-2587, 8799 FL.2 DaedeokPlaza Bldg, 206, Geumgok-Dong, Bundang-Gu, Seongnam-Si, Gyeonggi-Do 463-480, Korea