Speaking at the SteelOrbis 2016 Fall Conference & 75th IREPAS Meeting being held in Vienna on September 25-27, Li Xinchuang, vice secretary general of the China Iron and Steel Association (CISA), pointed out that China’s total steel consumption decreased by 3.6 percent year on year in the first eight months of this year and is expected to be 595 million mt in 2020, 552 million mt in 2025, and 492 million mt in 2030. Due to the slow growth of real estate and infrastructure construction, Chinese rebar consumption in 2015 was 200 million mt, down 3.5 percent year on year and is forecast at 155 million mt for 2020.
Regarding steel production, Mr. Li said that Chinese steel production decreased last year and in the first eight months of the current year as well, adding that it will continue to decrease in line with the slowing down of consumption and so there is no chance that production will see an increase. According to Mr. Li, Chinese steel production is mainly located in coastal areas such as Hebei, Liaoning, Shandong, Tianjin and Jiangsu Provinces, the total output of which was 446 million mt in 2015, accounting for 55.5 percent of national output in the given year. He stated that China has already eliminated 90 million mt and will eliminate 100-150 million mt in the next five years. He also remarked that Chinese steel exports amounted to 76.35 million mt in January-August this year and will decline to 80 million mt by 2020.
The CISA official indicated that Chinese steel production is dependent on iron ore with 950 million mt of iron ore imports in 2015 and 669.65 million mt in the first eight months this year. He went on to say that the big four iron ore producers, namely, Rio Tinto, Vale, Fortescue and BHP Billiton, expanded production in 2015 and they continue to implement efficiency programs to reduce production costs. For instance, Fortescue’s iron ore production cost declined to $13/mt, according to latest data released June 16, 2016.
Mr. Li said that the iron ore price forecasts stand at $40-60/mt for 2017, $45-65/mt for 2018, and $50-70/mt for 2019-20. He also added that, if steel and iron ore demand in China decreases gradually in the future, the new demand in other countries can hardly compensate for the decrease in China and so iron ore demand in the world will indicate a downturn in the future, which will definitely prevent prices from going up.