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12/05/2015
1
China Metallurgical Industry Planning and Research Institute
PLAN FOR FUTURE STUDY FOR DEVELOPMENT
May, 2015
Steel Market in China
Li Xinchuang
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1 Actual steel consumption
★ Actual steel consumption increased by leaps and
bounds, but growth rate declined
With development of national economy especially for rapid
growth of fixed asset investment, steel consumption in China
increased dramatically. In 2014, steel produt consumption in
China was about 702 million tons, which was 23 times of 32
million tons in 1970’s, and the consumption per capita has
also went beyond 500 kg. Due to New Normal of economic
development and strategic adjustment of economic
structure, the growth of domestic actual steel consumption
decreased significantly in recent years.
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Construction Industry consumed about 55%
of steel, and Machinery Industry consumed
nearly 20%, which still ranked 1st and 2nd
respectively in steel consumption. From the
long-term view, the Construction Industry will
show a decline in the proportion of steel
consumption, while consumption of the
Machinery and Automobile Industry will
increase gradually.
2 Steel consumption of main down-stream industries
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Steel export increased rapidly
In 2014, steel export from China was 93.78 million tons in total, increased by 50.5% year-on-year,
while steel import was 14.43 million tons, increased by 2.5% only year-on-year. On the basis of data
mentioned above, crude steel net export was 84.415 million tons, increased by 64.5% year-on-year.
In the first quarter of 2015, steel export from China was 25.78 million tons in total, increased by 40.7%
year-on-year, while steel import was 3.23 million tons, decreased by 10% year-on-year. On the basis
of data mentioned above, crude steel net export was 22.55 million tons, increased by 53% year-on-
year.
3 Steel export from China
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4 Steel production in China
Phase 1: Fluctuating
development in the
initial stage
Phase 2 (6.6% increase on
average/year):
Stable development in the
beginning stage
Phase 3(16.6% increase
on average/year): Leap-forward
development in the
accelerating stage
Phase 4: Innovative development
in the transition stage (transition
period from Phase 3 to Phase 4)
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Chinese steel production mainly located in costal area such as Hebei, Liaoning, Shandong,
Tianjin and Jiangsu Province, total output of which was 439 million tons accounted for 53.4% of
national output.
In 2014, crude steel output in Jiangsu Province was more than 100 million tons for the first
time. Then there are two provinces in China capable of producing crude steel more than 100
million tons.
There are five provinces in China producing crude steel more than Germany, who ranked
seventh in the world.
5 Distribution of crude steel production by provinces
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6 Steel production by companies and concentration
More than 40 million tons: HBIS, Baosteel
30 million tons: Sha Steel, Anshan Steel, WISCO,
Shougang
20 million tons: Shandong Steel
10-20 million tons: Ma Steel, Bohai Steel, Benxi Steel,
Valin, Jianlong, Wuan Steel, Fangda Group, Rizhao
Steel, Anyang Steel, TISCO, Baotou Steel, Jingye
Steel, Jiuquan Steel and Zongheng
5-10 million tons: Sanming Steel, Jinxi, Zhongtian,
Xinyu, Guofeng, NISCO, Zhongte, Shanxi Steel,
Lingyuan Steel and Ruifeng Steel
7 Over capacity-imbalance between supply and demand
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According to the information issued by the Ministry of Industry and Information Technology of the
PRC, there were 305 steel companies approved by the Standard Conditions of the Iron and Steel
Industry (revision 2012). As per the calculation method indicated in the Notice on Capacity
Replacement of Some Industries with Serious Overcapacity (MIIT, 2014, No. 296), the iron making
capacity of these 305 companies were totally 934.42 million tons, and the steel making capacity
were 1.14822 billion tons. Considering approximate 200 companies capable of producing but out of
the list, it is estimated that crude steel capacity in China is about 1.25 billion tons.
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Steel price in China was declining in the whole
year of 2014 only except for April seeing a
slight rebound. Up to the end of December,
CSPI was down to 83.09 points, decreased by
15.87 points based on the index in the
beginning of 2014. In the beginning of May
2015, CSPI was down to 73.19 points,
decreased by 9.9 points based on the index in
the beginning of 2015 and 23.2 points based on
the same period in 2014.
In 2014, steel settlement price of typical
companies was 3,024 yuan, decreased by
1,444 yuan/t, 726 yuan/t and 358 yuan/t
respectively based on the price in 2011,2012
and 2013. And the settlement price in
December even declined to 2,781 yuan/t. In the
first quarter of 2015, the average settlement
price declined further to 2,558 yuan/t.
8 Important hint-price
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Typical steel companies summarized by CISA in
2014 contributed the gross value of industrial
output of 2.92 trillion yuan, decreased by 5.15%
year-on-year. They provided sales revenue of 3.59
trillion yuan decreased by 2.98% year-on-year, and
submitted the profit of 30.444 billion yuan increased
by 40.36% based on 21.69 billion yuan in the same
period of last year. 13 companies among 88 were
lost with deficit rate of 14.77%. The total loss of
these 13 companies were 1.747 billion yuan,
decreased by 8.02% year-on-year.
Some companies such as Bao Steel and Sha Steel
made profit more than 1 billion yuan. Top 10
companies made profit 25.2 billion yuan in total
accounted for 59.63% of total profit of the whole
industry. Especially for HBIS, CITIC Pacific Special
Steel, profit of these companies increased by
263.15% and 44.3% respectively by means of
institutional reform, innovation of business mode as
well as cost efficiency. And loss of top 10
companies were 11.46 billion yuan, which
accounted for 97.56% of total.
9 Profitability of the steel industry
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In the first quarter of 2015, key large/medium scale
steel companies contributed the gross value of
industrial output of 61.8155 million yuan, decreased
by 18.47% year-on-year. They provided sales
revenue of 76.2918 million yuan decreased by
14.48% year-on-year. Total loss of these companies
was 987 million yuan. 50 companies among 101
were lost with deficit rate of 49.50%. The total loss
of these 50 companies were 10.355 billion yuan,
increased by 27.31% year-on-year.
2014年1月-2015年3月大中型钢铁企业销售收入变化情况
0.601.04
0.38
-0.63 -1.08
-0.33
2.06
1.851.02
-0.390.17
0.901.25 1.52
1.02
0
1000
2000
3000
4000
5000
6000
14.1月 2月 3月 4月 5月 6月 7月 8月 9月 10
月11月12月15.1月 2月 3月
亿元
-5
-3
-1
1
3
%
产品销售收入销售收入利润率
2014年1月-2015年3月大中型钢铁企业实现利润情况
28.4
-11.3
46.030.4
30.116.8
63.9
57.6
37.5
-17.5 12.35.3
-24.9
-8.7
27.6
-30
0
30
60
90
1月 2月 3月 4月 5月 6月 7月 8月 9月 10月 11月 12月
亿元
2014年
2015年
2014年1月-2015年3月大中型钢铁企业三费变化图
92.277.7
92.6 96.7 89.2
106.5
90.693.3102.4
93.0101.8
134.5
86.486.794.3
79.6 77.387.2 84.183.7
78.2 82.675.1 77.9 70.4 75.5
85.5
84.474.679.3
29.028.0 32.136.5 35.433.4 34.6 33.7 36.3 36.3
38.5 43.737.131.6
34.4
0
20
40
60
80
100
120
140
14.1月 2月 3月 4月 5月 6月 7月 8月 9月 10
月11月12月15.1月 2月 3月
亿元
管理费用 财务费用 销售费用
9 Profitability of the steel industry
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4 3
2
5
10 New normal, opportunities and development of Chinese steel industry
Low growth:
Production and
consumption developed
in fluctuation at the
peak range. 1
Low price:
Steel price at the
absolute low level,
while ore price at the
relative low level.
Great pressure:
Great pressure imposed by
environmental issues, and
financial conditions not
favorable for development of
steel industry.
Low profitability:
Severe market
competition;
operation difficulties
for long-term
Resolution
● Idea innovation
● Business model
innovation
● Management
innovation
● Technical
innovation
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10 New normal, opportunities and development of Chinese steel industry
- New Normal is one strategic opportunity to speed up
structural adjustment, transformation and upgrading of the
steel industry.
- New Normal is one important opportunity to promote fair
competition for the steel industry.
- New Normal is one fatal opportunity to accelerate
transformation of Chinese steel industry from large to strong.
New opportunities under New Normal
New opportunities under New Normal
New opportunities under New Normal
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思路及研究方向探讨 4 4
思路及研究方向探讨 4 4 (4)
1
5 3
4
6 2
10 New normal, opportunities and development of Chinese steel industry
Changes of Chinese steel industry over the coming years
From steel
manufacturing to
material service Coordinated competition
instead of disordered
competition; improve
industrial concentration
by means of accelerated
consolidation and
reorganization
Diversified
development instead
of single
development Extensive development
with high consumption
and emission to
sustainable development
with low carbon emission
Development driven by
innovation instead of by
investment
From domestic
development to
integrated development
home and abroad
Six
changes
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11 Forecast of production, consumption and raw materials demand
Crude steel production in China has already in the peak
round showing downward trend as well, but recovery and
fluctuation in some individual years cannot be refused.
Pig iron production tells the same story. And due to
increase of scrap supply, the average drop of pig iron
output will be faster than the same of crude steel over the
coming years.
Considering material consumption of steel making, ratio
of iron to steel, proportion of BOF and EAF production as
well as casting iron production, iron ore demand will
enter a transition phase moving downward.
Unit：104 t
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