China steel demand grows in positive way, but at slower pace

The slower growth of China's steel demand in 2014 and 2015 was keeping with the the country's economic development level as an industrial producer and reflected its change of economic model, said a senior official of an international industry association on Wednesday.

After a 6.1-percent growth in 2013 with support from government infrastructure investment, apparent steel use in China was expected to slow to a growth of 3.0 percent in 2014 to 721 million tons. In 2015, the steel demand growth is expected to further fall to 2.7 percent to 741 million tons, according to the Short Range Outlook published by the World Steel Association (Worldsteel).

"It still grows in a positive way, but at a slower pace," said Edwin Basson, director general of Worldsteel, pointing that the amount of China's steel demand in the coming two years was still "incredible."

Worldsteel forecasted that global apparent steel use will increase by 3.1 percent to 1.53 billion tons in 2014 following a growth of 3.6 percent in 2013. In 2015, world steel demand was predicted to grow further by 3.3 percent and reach 1.58 billion tons. China's consumption was almost half of that of the world.

Basson said that the reason for the slowdown of China's demand growth was the shift of the Chinese economy from being investment driven to consumer driven. "We have pretty much seen the process taking place in China that the government is stepping back from very large investment programs," he said.

The deceleration of China's steel demand will prevent the global steel demand from registering a higher growth rate for the coming two years, according to the outlook report.

Basson said the world was going to see in the future more moderate growth of the Chinese economy, not only in the steel use, but generally in all the commodities.

"We've all become used to China being the driver of the world economy, particularly in resources, over the past decade or so," the director general said, adding "there's no candidate waiting in the wings to take over this lead role."

Although steel use in Middle East and North Africa grew quite strongly and was useful to the global economy, it's still not strong enough to replace the Chinese effect.

Edwin said as the developing economies were stepping back, the steel demand in 2014 and 2015 was going to depend more on the developed economies to ensure growth in steels.

"Not only can modern economy not survive without steel, the perform of the steel industry actually becomes a very good indicator of the performance of the developed and undeveloped economic systems," he added.

Worldsteel, one of the largest industry associations in the world, represents approximately 170 steel producers (including 17 of the world's 20 largest steel companies), national and regional steel industry associations, and steel research institutes. Its members represent around 85 percent of world steel production.