China’s Steel Industry:
1 / 26

SBB Dubai 3 September 2007 Roger Manser SBB Global Editor - PowerPoint PPT Presentation

  • Uploaded on

China’s Steel Industry: A New World Reality. SBB Dubai 3 September 2007 Roger Manser SBB Global Editor. Structure of Presentation. How is China changing? How is China changing the world steel industry? Some conclusions. (1) How is China changing?.

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
Download Presentation

PowerPoint Slideshow about ' SBB Dubai 3 September 2007 Roger Manser SBB Global Editor' - geraldo-garcia

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript

China’s Steel Industry:

A New World Reality

SBB Dubai 3 September 2007

Roger Manser SBB Global Editor

Structure of Presentation

  • How is China changing?

  • How is China changing the world steel industry?

  • Some conclusions

(1) How is China changing?

  • Becoming a manufacturing powerhouse

  • Looking for self-sufficiency

  • Investing in urbanisation/ new infrastructure

  • Consequences in China for steel:

  • Strong growth in production and consumption

  • A growing excess of production over consumption

  • Slow consolidation/continuing fragmentation

Looking to be self-sufficient

Three Gorges Dam 3m+ tonnes

Construction takes 200m t/y= 50-60% of China’s consumption


19 %/ yr

in Million tonnes


7.1 % p.a.


13.3 % p.a.

Strong Growth in Production

Crude Steel Output 1949 – 2008f

Strong Domestic Consumption

Million tonnes


16%/ yr

Fragmentation Continues

Typical Production Chge

Output 20052006 %

Top 10 Mills 5-23m131.1145.9 +11.3

Top 11-20 Mills 3-5m56.163.9 +14.0

Other Reporting* 1-3m103.9125.3 +20.6

Non Reporting* <1m64.783.6 +29.2

* Around 75 companies report to CISA

Source: CISA, SBB

But some m a at the top end
But Some M+A at the Top-End

Shougang 11m

Tangshan 19m

Caofeidian 5m

Baosteel 23m

Anshan 15m

Bayi 4m

Benxi 7m

Handan 5m


Kunming 5m

Shagang 15m

Wuhan 14m


How is China changing the world steel industry?

  • Higher raw material prices

  • New investment, mainly in flats

  • Import substitution ….. now exports

  • Financialization, and global M+A

  • Defensive moves

How China is changing the world



Commodity Price







Defensive and Other Reactions

Rising iron ore prices

$ cent/dmtu

Australian iron ore price ex-port fob (SBB)

New steel + ore investment


Source: NBS

New rolling capacities 2007-2009

Total 175m t/y

Source: SBB

Import substitution now exports
Import Substitution….now exports

HDG Imports are beginning their fall, with low quality HDG being replaced

HRC Imports well on their way to being replaced

Source: CISA, SBB

Fall in Imports; Rise in Exports

Tonnes (m)

Source: CISA, SBB

Some reported major plate hrc investments t y for start up 2007 08
Some reported major plate/HRC investments (t/y): for start-up: 2007/08

Caofeidian +5.5m


Benxi +4m

Handan Zongheng +6m

Beitai +4m

Handan +5.5m

Tianjin +3.8m

Rizhao +5m

Anyang +4m

Baosteel +3.7m

Maanshan +5m

Ningbo +4m


Threat from Chinese Exports

SBB estimates

Producer-led pricesinc High Strength, Tinplate, HG Flats, HG Pipe, Most Stainless/ Specials

Most at threat




Producer-influenced pricesinc Other HG Flats, Some Beams, Other Stainless etc

Moderate threat


Commodity pricesinc Bars, Rods, Most Sections, Other Flats (for construction), Other Pipe

Quality: grade, dimension, market etc

Demand Prices Profits M+A Finance

2003-6: Global consolidation

2001-5: Steel suppliers earn more

  • ArcelorMittal

  • Tata Corus

  • Essar Algoma

  • SSAB Ipsco

  • NLMK Duferco

Open to Foreign M+A

Dislike of Foreign M+A

Dislike of Foreign M+A by Companies

SBB’s Conclusions for China:

  • A slow-down in production and consumption growth

  • No real restructuring through M+A

  • Supply side export controls?

  • Smaller mills may soon face squeeze

  • BUT

  • Crude production soon @ 500m t/y

  • Some decline in exports, in due course

SBB’s Conclusions for China and the World

  • Demand strongest in emerging markets

  • Three scenarios:

    • Insufficient new capacity globally

      • Growth in CN exports/AD+CVD

    • Stronger RMB, curbed GDP, licences

      • Decline in exports

    • Decline in global GDP growth (CN )

      • Prices weaken

Other Pointers for the Future

  • Higher raw material prices for some time

  • Growth outside Europe - GHGs

  • More complex global supply chains

    • More differentiation in finished qualities

  • More price volatility/shorter cycles

    • Reference prices

  • Global M+A less likely

    • But more local M+A probable


Have you got a China steel map yet?

US map also available