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China's 2020 crude steel output expected to drop - govt research body

2019-12-13 14:28:10.0
China’s crude steel output in 2020 is expected to ease from a record high this year to 981 million tonnes, a government consultancy said on Thursday.

The 2019 output for the world’s top steel producer is seen at 988 million tonnes, according to Li Xinchuang, president of the China Metallurgical Industry Planning and Research Institute.

In the first 10 months of the year, China has churned out 829.22 million tonnes of crude steel, up 7.4% from a year earlier.

Meanwhile, demand is seen rising 7.3% to 886 million tonnes in 2019, but was expected to drop from that level by 0.6% in 2020, a report released by the research body showed.

“Steel consumption in 2019 is better than expected mainly due to rapidly growing infrastructure investment and real estate development, while industrial production is also generally stable,” Li said.

Demand for steel in the construction industry is expected to rise 11.2% this year to 478 million tonnes, but is seen slipping 0.6% in 2020.

Following is a breakdown of steel demand outlook for 2019 and 2020 by industry:

Sector 2019 % 2020 %

change change

y/y y/y

Construction 478 11.2 475 -0.6

Machinery 142 1.4 142 0

Automobile 50 -7.4 48.2 -3.6

Energy 34 3.0 34.5 1.5

Shipbuilding 11.3 3.7 10 -11.5

Home Appliances 13.5 8.0 14 3.7

Railway 5.4 5.9 5.5 1.9

Container 4.9 -29.0 5.0 2.0

* Measured in million tonnes

Li called for further “large-scale consolidation” in the world’s largest steel market, while pointing to China Baowu Group taking a stake in Maanshan Iron & Steel.

Baowu Group and Shougang Group recently swapped shares in their listed arms.

Meanwhile, a rapid growth in output this year has stoked worries about China’s years of efforts to cut over-capacity, leading to a joint probe on production capacity at its steel mills by the National Development and Reform Commission and other government entities in November.

Some steel mills are producing more than their total capacity, which remained an issue, Li said. “It is not scientific, not sustainable, and not in line with environmental requirements.”

The research body expects iron ore demand in China to reach 1.225 billion tonnes in 2020 and 1.264 billion tonnes in 2019. China brought in 1.06 billion tonnes of iron ore last year.

China’s pig iron output is expected to contract to 775 million tonnes in 2020 from 800 million forecasted for 2019.
Source: Reuters (Reporting by Min Zhang and Shivani Singh in Beijing; Editing by Muralikumar Anantharaman and Arun Koyyur)

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