The Performance and Prospects of China’s Steel Industry China Iron and Steel Association Wang Liqun I. Status quo of iron & steel industry in 2014 I. Status quo of iron & steel industry in 2014 1. Global crude steel output Global crude steel output from 2008-2014 全球 Global 150000 中国内地 除中国内地世界合计 China mainland World total (excl. China mainland) 90000 60000 2008年 • • • 2009年 2010年 2011年 2012年 2013年 2014年 1月 10月 7月 4月 1月 10月 7月 4月 1月 10月 7月 4月 1月 10月 7月 4月 1月 10月 7月 4月 1月 10月 7月 4月 1月 10月 7月 4月 30000 1月 单位：千吨 120000 2015年 China’s crude steel output follows the same pace of that for global crude steel; Starting from 2009, China’s crude steel output is similar to that of other countries combined; In 2014, global crude steel output is 1637 million tons, while China is 823 million tons, accounting for 50.27% of global total. I. Status quo of iron & steel industry in 2014 1. Global crude steel output Crude steel output of main countries (regions) excluding China unit：10,000 ton Comparison of crude steel output in different regions in 2014 8 7.9 6 Percentage 4 2 Countries/regions 2014 total 2013 total Total comparison Japan 11066.5 11059.5 0.06 US 8834.7 8687.8 1.69 India 8320.8 8129.9 2.35 Russia 7065.1 6885.6 2.61 Korea 7103.6 6606.1 7.53 Chinese Taiwan 2325.0 2228.2 4.34 2.8 2.0 1.8 1.4 1.4 0 -0.7 -2 -4 -0.8 -1.4 -1.8 Asia (excl. China mainland Oceania Asia Middle East Africa South America North America CIS other European Countries EU world total (excl. China mainland) world total -2.8 1.1 • In 2014, global crude steel output is up be 1.1% compared with last year. Global total output excluding China is up by 1.4% • The five main steel producing countries excluding China mainland have all increase output I. Status quo of iron & steel industry in 2014 2. China’s crude steel output Trend comparison of crude steel 中国粗钢日产情况 50.0 万吨/天 Daily output of crude steel in China 40.0 225.40 213.44 220 30.0 195.78 200 20.0 187.75 174.58 136.75 9.3 -10.0 8.9 120 3.1 0.9 1.1 2008 2009 2010 2011 2012 2013 9月 5月 12月 8月 1月 6月 4月 11月 9月 2月 7月 5月 12月 3月 10月 8月 1月 6月 4月 11月 9月 2月 7月 5月 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 -20.0 1月 3月 5月 7月 9月 11月 1月 3月 5月 7月 9月 11月 1月 3月 5月 7月 9月 11月 1月 3月 5月 7月 9月 11月 1月 3月 5月 7月 9月 11月 1月 3月 5月 7月 9月 11月 1-2月 4月 6月 8月 10月 12月 100 7.5 12月 1月 13.5 3月 0.0 155.57 160 140 10.0 10月 180 8月 240 2014 2015 • In 2014, China’s crude steel output is 823 million tons, up by 0.9%, which is the lowest increase range for the past 30 years. Daily crude steel output is 2,254,000 tons. • From January to February, China’s pig iron output is 119 million tons, maintaining the same level of last year; crude steel output is 131 million tons, up by 1.5% from last year. There is zero growth or decrease in iron and steel output. • Daily crude steel output is 2,213,400 tons, up by 33,700 tons from last year. I. Status quo of iron & steel industry in 2014 3. Crude steel consumption Apparent consumption of crude steel and comparison 粗钢表观消费量及同比 万吨 % 6800 6400 12.32 15 10.02 10 7.36 6.30 6000 5 5600 1.85 -0.04 5200 -0.97 -1.76 0 -1.86 4800 -3.24 -5.82 -6.25 4400 -6.54 -5 -8.85 4000 -10 1月 2月 3月 4月 5月 6月 7月 8月 9月 10月 11月 12月 3月 4月 5月 6月 7月 8月 9月 10月 11月 12月 2013 粗钢表观消费量（万吨） Apparent consumption 2014 同比增长率（%） Growth rate from last year In 2014, China’s crude steel (reduced amount) apparent consumption is 739 million tons, down by 26 million tons from last year, that’s a decrease of 3.4%, which is the first drop since 1996. I. Status quo of iron & steel industry in 2014 3. Crude steel consumption Stockpile of steel products 2011年 2012年 2013年 2014年 1500 1200 900 600 1月 2月 3月 4月 5月 6月 7月 8月 9月 10月 11月 12月 By end of 2014, steel stockpile in 22 cities is 8.2 million tons, significantly lower than the level from past years. Considering the stockpile, actual consumption of crude steel in 2014 is 750 million tons, down by 5.68 million tons, with a decrease of 0.8%. I. Status quo of iron & steel industry in 2014 3.Change of steel price and raw material price Price and quantity trend of imported iron ore Import quantity Aver. price of clotted powdered ore 烧结用粉矿平均价格 进口量 10000 200 8000 150 6000 100 4000 50 11月 9月 7月 5月 0 3月 2014… 9月 11月 7月 5月 3月 2013… 9月 11月 7月 5月 3月 2012… 11月 9月 7月 5月 3月 2011… 9月 11月 7月 5月 3月 2010… 9月 11月 7月 5月 3月 0 2009… 2000 Price and quantity trend of imported coking coal 进口量 1000 进口均价 Import quantity 200 Aver. Import price 800 150 600 100 400 50 200 11月 9月 7月 5月 3月 11月 2014年1月 9月 7月 5月 3月 2013年1月 11月 9月 7月 5月 3月 2012年1月 11月 9月 7月 5月 3月 2011年1月 11月 9月 7月 5月 3月 2010年1月 11月 9月 7月 5月 3月 0 2009年1月 0 In 2014, the price of iron ore keeps dropping, by the end of 2014, the price of 62% powder ore is 71.75 USD/ton, up by 46.8% from last year. China’s total iron ore import is 933 million tons, up by 13.8% from last year. I. Status quo of iron & steel industry in 2014 3. Change of steel price and raw material price Change of price index of iron ore and steel Combined price index of steel 180 Price index of iron ore 1000 900 800 700 600 500 400 300 200 100 0 160 140 120 100 80 60 40 20 2008年 2009年 2010年 2011年 2012年 2013年 2014年 1月 10月 7月 4月 1月 10月 7月 4月 1月 10月 7月 4月 1月 10月 7月 4月 1月 10月 7月 4月 1月 10月 7月 4月 1月 10月 7月 4月 0 1月 Combined price index of steel 铁矿石价格指数 Price index of iron ore 钢材综合价格指数 2015年 In 2014, steel price goes plummeting. By end of December, the price index of steel price is 83.09, down by 16.05 from year beginning. In 2014, the average settlement price is 3074 RMB/ton, up by 358 RMB/ton from last year. I. Status quo of iron & steel industry in 2014 3. Change of steel price and raw material price Profit of member steel companies 80 60 40 20 -40 -60 Medium and large steel companies continue to keep profit since last March. The profit level is relatively good in the past 3 years, but the overall profitability is rather low. 2015年1月 12月 11月 10月 9月 8月 7月 6月 5月 4月 3月 2月 2014年1月 12月 11月 10月 9月 8月 7月 6月 5月 4月 3月 2月 12月 11月 9月 10月 8月 7月 6月 5月 4月 3月 2月 2013年1月 -20 2012年1月 0 I. Status quo of iron & steel industry in 2014 4. Steel import & export 1000 800 600 Trend of import and export of steel 进口 出口 Import Export 400 200 0 In 2014, China’s import steel is 14.43 million tons, up by 2.5% from last year; steel export is 93.78 million tons, up by 50.5% from last year and makes a historic high; the new export of reduced crude steel is 84.41 million tons, up by 33.08 million tons. I. Status quo of iron & steel industry in 2014 4. Steel import & export- traditional markets keep increasing Steel export in 2014 北美自由贸易区 (除美国) 香港 2% 3% 中国台湾 3% 美国 4% 欧洲其他国家 澳门 大洋洲 0% 国家 中美洲 日本 1% 2% 2% 1% Export to main destination countries 世界其他 0% 1400 1297 1200 1000 东盟 28% 800 600 400 欧盟28国 7% 663 478 380 369 340 340 321 282 261 200 非洲 7% 0 韩国 14% 南美洲 7% 亚洲其他 8% 中东地区 13% Other European countries Oceania Macao SAR ASEAN Korea Middle East Other Asian countries South America Africa EU 28 countries US Chinese Taiwan HK SAR NAFTA (excl. US) Central America Japan Korea Vietnam Phillippine India Thailand Indonesia US Singapore HK SAR In 2014, China exports 26.31 million tons of steel to ASEAN countries, up by 51% from last year; export to Korea is 12.97 million tons, up by 33% from last year; export to traditional markets like EU and US also keeps increasing. I. Status quo of iron & steel industry in 2014 4. Steel import & export- emerging markets keep growing momentum 250 Percentage of main export in total export regional organization World total 2014 100.00 ASEAN Increase/dec rease 2013 28.05 235 Growth rate of African countries 200 143 150 102 100.00 27.95 0.10 Korea 13.83 15.60 -1.77 Middle East 13.42 11.53 1.90 Asia others 7.87 7.22 0.65 South America 7.33 7.98 -0.65 Africa 7.02 7.32 -0.29 EU (28 countries) 6.69 5.86 0.83 USA 3.63 3.54 0.08 Chinese Taiwan 3.01 2.50 0.51 HK SAR 2.78 3.30 -0.52 NAFTA( excl. US) 2.21 1.68 0.53 Central America 1.76 1.67 0.09 Japan 1.67 1.24 0.43 other EU countries 1.38 2.32 -0.93 Oceania countries 0.85 1.04 -0.20 Macao SAR 0.14 0.32 -0.18 other parts of the world 0.07 0.03 0.04 50 106 75 100 42 -9 0 17 46 25 61 34 -50 Egypt Ecuador Nigeria South Africa Angola Oman Ghana Israel Kenya Algeria Ethiopia Cameroon Export growth in Middle East countries 100 80 60 40 20 0 85 Saudi Arabia 73 UAE Export to Africa, Middle East and South Asia keeps sound growth momentum 68 68 Iran Lebanon I. Status quo of iron & steel industry in 2014Export growth of certain steel products 4.Steel import & export- growth of new product export Product Export steel products in 2014 2014年 2013年 5000 4,367 4000 单位：万吨 3,086 2,764 3000 2000 1,711 1,006 1000 957 460 410 400 354 2014 Comparison with last year 2013年 464.36 300.93 54.31 115.52 90.07 28.26 117.29 91.99 27.50 638.31 454.71 40.38 6.43 2.95 117.76 15.56 12.78 21.76 12.50 10.26 21.84 167.61 155.80 7.58 216.29 184.38 17.31 28.03 24.24 15.61 34.46 6.82 405.61 2013年 0.3－ Cold 小于 thin roll Cold thin roll Normal strength 0.3－ 0.3mm 0.5mm冷 0.5-1mm Cold thin roll Cold thin roll 0.5mm冷 冷轧普 板材 管材 铁道用材 其它钢材 一般强度 轧普薄卷 棒线材 角型材 0.5-1mm 1－ 轧普薄卷 薄卷 冷轧普薄 8% Rod and wire angle section bar panel tube railway use others 一般强度 3mm 6% 卷 5% 小于 冷轧普薄 高强 41% 0.3mm 度冷 Normal strength 卷 High strength 0.5- 1－3mm Cold thin roll Cold thin roll 冷轧普 37% 轧普 Cold thin roll 1mm 高强度冷 薄卷 薄卷 1－3mm 高强 轧普薄卷 5% 5% 1－3mm Normal strength 一般强度 度冷 3% 一般强度 Cold thin roll 冷轧普薄 轧普 0.5-1mm 卷 冷轧普薄 薄卷 High strength 高强度冷 42% 卷 Normal strength 3% Cold thin roll 轧普薄卷 Cold thin roll 42% 3% High strength High strength Cold thin roll Cold thin roll 59 38 0 Cold roll lamella Galvanized sheet Aluminum galvanized sheet Clad plate (sheet) Oriented silicon sheet Steel furnace tube Cold-bent general profile Steel tube connector, side leg, pipe sleeve Steel wire Steel sheet pile Cold roll alloy steel rod unit：10,000 ton，％ In 2014, in addition to normal hot roll products, the export of cold roll, tin plate, aluminum galvanized sheet, oriented silicon sheet and steel sheet pile all increase significantly. Thin type and high-strength cold roll products account for increasing percentage of cold roll export. 2014年 1.Status quo of iron & steel industry in 2014 • • • • • Global market demand keeps stable increase, main economies in the world have different levels of growth in steel output. In spite of the Ukraine crisis, the steel output from CIS is down by 2.8% from last year, but Russia keeps an increase of 2.61%. In 2014, China’s crude steel output is 823 million tons, up by 0.9% from last year, which is the lowest increase range in the past 30 years. In 2014, China’s crude steel (reduced amount) apparent consumption is 739 million tons, down by 26 million tons from last year, which is a decrease of 3.4%, and is the first drop since 1996. considering stockpile, actual consumption of crude steel in 2014 is 750 million tons, almost the same level from last year. In the new situation, actual consumption of steel has entered the peak time. In 2014, China’s iron ore import is 933 million tons, up by 13.8% from last year. Iron ore price keeps going down. By end of 2014, 62% powder ore price is 71.75 USD/ton, down by 46.8% from last year. The price of steel products also goes plummeting. By end of December, the price index of steel product is 83.09, down by 16.05 from year beginning. Thanks to the sharp price decrease of raw material and cost cut of steel companies, the overall profitability of the industry is improved, but the benefit space brought by the price cut of raw material is offset by the steel price. The profitability of the industry is relatively lower. Reason for export increase in 2014: stable increase of global market demand; steel companies make technical innovation, process optimization, cost cut and efficiency improvement and enhanced product competitiveness; continuous increase of traditional export market, sound increase in newly-developed regions; increase of new product export. II. Overview and outlook of iron & steel industry in 2015 II. Overview and outlook of iron & steel industry in 2015 1. Steel demand increase – domestic market experience slight increase in steel demand Maintaining mid and high speed growth Real estate：slight rebound of sales space, newlystarted projects become stable, investment increase continue to slow down. Heading towards mid and high level machinery：insufficient demand, continue increase of stockpile, downward pressure is mounting, increase of industry added value is expected to go down in 2015. Percentage point of GDP increase in China Automobile ： increase of production and sale continue to go down. Two “mid and high” 16 15.2 14.3 14 11.7 12 8 7.8 6 5.1 2 Container：production increased by 2% 10.6 10 4 Ship: backbone companies have sufficient orders in hand, completion rate has slight increase. 14.2 3.9 7 Household appliance ： large household appliance enter into zero growth phase, product becomes more high-end and energy conservative. Infrastructure：railway, road and infrastructure keep relatively fast growth rate. II. Overview and outlook of iron & steel industry in 2015 1. Steel demand increase – domestic market experience slight increase in steel demand Forecast of steel demand at downstream iron & steel sector in 2015 Sector 2014 Increase rate 2015 forecast Increase rate forecast Construction 37500 0.5% 37800 0.8% Machinery （incl. automobile） 21400 5.2% 22100 3.3% Ship building 1400 18.2% 1430 2.1% Household appliance 950 0.5% 950 0% Tube 1040 3.0% 1090 4.8% Container 480 4.0% 500 4.2% Total of above sector 62770 2.9% 63870 1.7% Apparent consumption of crude steel 73830 -3.4% ？ ？ II. Overview and outlook of iron & steel industry in 2015 1. Steel demand increase – main economies maintain sound increase momentum Global economy forecast in mid 2015 by OECD GDP growth in developed economies 10 2014 Japan Korea United States Euro area (15 countries) 10 7.7 8 World 8 2015e 6 6 4 4 7 4 2.6 2.2 1.4 2 2 1.7 1.1 0.6 -0.5 0 0 2002 2003 2004 2005 2006 2007 2008 2009 -2 -4 3.1 source：OECD（2014 November forecast） 2010 2011 2012 2013 2014 2015 2016 美国 -2 英国 加拿大欧元区 德国 US UK 法国 意大利 巴西 印度 中国 Canada EU Germany France Italy Brazil India China Global Source：OECD（2015 mid-term forecast） -6 -8 全球 OECD 2015 mid-term forecast tune up the expectation for global economic growth; Since crude oil price goes down and central bank adopted QE monetary policy to support economy, global economy in 2015 will be improved. II. Overview and outlook of iron & steel industry in 2015 2. Mounting environmental protection pressure, reducing productivity and phasing out backward productivity are at final stage • New environmental protection law and regulations since Jan. 1st 2015; • Environmental protection law • Measures for environmental protection bodies to close down companies and confiscate products • Measures for environmental protection bodies to limit production and stop production for rectification • Measures for companies and institution to disclose information on environmental protection • Measures for investigating into urgent environmental incidents In March 2015, MEP works on a taskforce for air pollution cases in Linxi, Shandong Province. In the same month, Linxi announced to investigate into 18 malpractice of 8 companies. They are order to stop production immediately, re-apply for EIA procedure within time limit, rectify illegal practice on the spot and pay fines over 1.17 million RMB. The facilities, equipments that cause pollutant discharge in Sande Special Steel Co. Ltd., Jiangxin Iron & Steel Co., Ltd. And the Shengyang Group Co., Ltd. are confiscated by law. The malpractice cases of the three companies were transferred to public security bodies. The standard for iron & steel discharge is effective since Jan. 1st 2015. Compared with past standards, it has the following features: （1）Wide scope：including iron & steel and coking production process; （2）More pollutant control items：28 water pollutants, 19 pollutants, emission limit for NOx and Dioxin is added; heavy metal and toxic pollutant are added in water pollution （3）High indicators：significant higher limit value for smoke and dust emission density and SO2 （4）Special discharge limit value：special discharge limit value is set down for newly-constructed projects and environmentsensitive areas II. Overview and outlook of iron & steel industry in 2015 3. Internet ＋ion & steel change traditional steel selling mode Sales mode of member steel companies in 2014 直供 零售 分销 分支机构 Steel company setting up online retailer platform 出口 Direct supply Distribution Retail Branch Export 分支机构 12% 出口 8% 零售 4% Third-party online retailer platform 直供 35% • Offline-online • Open trade platform • Trade platform developed by steel information website • Online retailer platform following the mode of Taobao Alibaba officially starts IPO on Sept. 19th (US time) at NYSE, with stock code of “BABA”. Issue price 68 USD opening price 92.7USD Opening compared to issue increased by 36.3% 分销 41% Export direct supply distribution retail branch export Source ： CISA Online steel retailers have great potential: in 2014, member steel companies sell 310 million tons of steel products through direct supply, branches and export, accounting for 55% of total. Distribution and retail mode sell 260 million tons of steel products, accounting for 45%. Financing scale 21.77 billion USD, largest IPO in US Stocks issued: 320 million Total equity: 2571 million stocks II. Overview and outlook of iron & steel industry in 2015 4. Steel export in new normal • Global economic growth Considering the resource and environment, China’s steel industry always sticks to meeting domestic demand. The Chinese government doesn’t encourage low-end steel export. Since Jan. 1st 2015, the government eliminates the tax rebate for certain boron steel products. • With the recovery of global economy, steel demand in the world is also increasing. In 2014, in addition to boron steel, the export of other steel products also enjoy significant growth. According to OECD, global economic growth in 2015 is higher than 2014. The steel export in 2015 is expected to stay at higher level. Globalization of steel industry is accelerating Global market competition helps to improve product quality Overseas marketing service capacity is enhanced Understand global market demand and promote new product R&D Product export, service export, overseas investment 6 5 4 3 2 1 0 -1 Macro economy and policy environment Global market demand is growing More favorable global competition, Sino-Korean, Sino-Australian free trade agreements; Sino-ASEAN free trade negotiation; Trade facilitation measures China’s steel output accounts for half of global total. The export growth is accelerating in recent year, and it’s normal to encounter trade friction during export. Adjusting the export pace and export category is an integral part for transforming China’s steel sector and industry structure, but the adjustment takes time. II. Overview and outlook of iron & steel industry in 2015A 4. Steel export in new normal • • The export of certain low added-value products affect the overall 16 reputation of China’s steel products 14 Further research is needed for understanding global market rules and international laws • Number of relief cases of main steel trade Broader space to explore in working with foreign industries 12 10 8 6 4 2 0 2014年 Trade interest conflict is intensifying 2013年 2012年 2011年 2010年 2009年 2008年 2007年 2006年 2005年 •Responding to local market demand, transformation and upgrade, restructuring and innovation drive •Encouraging and developing new type of export marketing mode Trade interest conflict is intensifying- trade friction is intensifying •Dialogue with the sector is a prime choice for dealing with trade friction Development mode conflict is intensifying – tackling trade friction is more difficult •Further improving sector early-warning and self-discipline mechanism Global market competition is intensifying – dealing with trade friction is more important •Setting up mutually-beneficial and win-win friendly partnership with foreign industries through multiple approaches II. Overview and outlook of iron & steel industry in 2015 • China’s economy is shifting from high growth to mid-high growth. Economic growth is transforming from investment-driven to consumption-driven, growth power is moving from traditional industry to high technology. Throughout this process, economic structure continue to optimize, raising new requirement on steel product type, quality and service capacity of steel companies and bringing in new demand. Steel companies have to follow the economic restructuring pace to adjust their own structure and achieve transformation and upgrade; • New environmental protection law, new standard for pollutant discharge in steel industries are implemented, environmental monitoring and supervision are intensified, enforcement is enhanced, environmental pressures on companies is mounting. It is a must trend for steel companies to increase investment in environmental protection; • Internet + steel mode brings impact on traditional trade and distribution mode. It also brings transformation to the operating mode of the industry, and offers new opportunity and challenge for it. • With the recovery of global economy and the growing global steel demand, the steel export in 2015 is expected to stay at relatively high level. As a major steel exporter, China suffers from frequent trade friction, which is also a new normal. China’s steel industry always follow the path of establishing mutually-beneficial, win-win friendly partnership with foreign industries, which is the foundation for solving trade friction. Dialogue with the industry is a prime choice for dealing with trade friction. China’s steel industry needs to improve its self-discipline mechanism and properly resolve the trade friction. Thank you !
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