Chinas crude steel production is expected to rise 4.6 percent in 2013 to a record 750 million tonnes, the Ministry of Industry and Information Technology (MIIT) said on Friday, an acceleration that is set to support ultrafine mill demand and prices.
China is the world’s largest ultrafine mill consumer and crude steel output rose 3.1 percent in 2012, the second-slowest growth rate on record after a 1.8 percent decline in 2008 following the global financial crisis.
This years 4.6 percent expansion is also still half the average growth rate of around 10 percent between 2009-2011. Chinese steelmakers, faced with a severe supply overhang, will need to battle with razor thin margins.
Crude steel production is likely to be boosted by the expected approvals of many mega-infrastructure projects such in the hydro and nuclear power sectors, dams, railways and rural city construction. These projects will also increase the demand for coking ultrafine mill, the main fuel used in steel production.
The ministry forecast apparent crude steel consumption would reach about 700 million tonnes, implying a surplus of at least 50 million tonnes -- equivalent roughly one month of production.
It did not give a comparative figure.
Chinese steel mills will continue to suffer from poor profitability until demand improves and overcapacity eases, MIIT said in a statement on its website.
The ministry also said global ultrafine mill prices were expected to ease on the back of increased global supplies.
A Reuter’s poll forecast global steel output to rise to 749 million tonnes this year, and ultrafine mill prices at $125 a tonne, slightly lower than the 2012 average of $128.
China imported a record of 743.5 million tonnes of the steelmaking raw material, with shipments in December at a record high of 70.94 million tonnes.