China's Ministry of Industry and Information Technology (MIIT) has lately issued its review of the domestic steel industry in the first seven months of 2009. The principal points outlined in the review are as follows--With certain signs of a recovery seen in the global economy since the second quarter of this year, steel demand in the Chinese domestic market has climbed as a result of the country's economic stimulus package aiming at expanding domestic demand and ensuring economic growth. Against the background of the steady national economy and increased market demand, steel prices in China registered an obvious ascension, with improvement also recorded in industrial operation.
1. With the rapid recovery of steel production, daily crude steel output remains high.
According to the figures released by China's National Bureau of Statistics, the country's crude steel production in the first seven months of 2009 totaled 317.31 million mt, up 2.9 percent year on year. Average daily steel production in this period was 1.497 million mt, higher than the average daily level of 1.368 million mt in 2008. In July, crude steel production reached 50.676 million mt, up 12.6 percent year on year, with average daily production at 1.635 million mt, down 0.8 percent month on month.
2. Steel inventory remains high despite the obvious growth in market demand.
Since the second quarter of the current year, steel demand in China has grown significantly as a result of the implementation of the country's macroeconomic policies; nevertheless, market inventory has still remained at a relatively high level. By the end of July, market inventory of the major steel product varieties in 26 major cities across China totaled 9.44 million mt, up 5.4 percent month on month. Wire rod inventory saw a month-on-month increase of 14.5 percent, while inventories of HRC and rebar rose by 7.1 percent and 5.4 percent respectively from June levels.
3. Steel prices have climbed up continuously.
Following a series of economic stimulus policies, China's steel market has recorded a remarkable rise in demand and a slight recovery in market prices. By the end of July, China's comprehensive steel price index stood at 110.15 points, up by 14.59 points or 15.3 percent compared with the level at the end of April. However, this figure was down 31.6 percent year on year.
4. Steel exports have slumped drastically while imports have surged
According to the customs statistics, China's exports of finished steel in the January-July period totaled 11.16 million mt, down 67.3 percent year on year, while semis exports amounted to 10,000 mt, down 97.2 percent. In the same period, imports of finished steel were 9.88 million mt, down 1.6 percent year on year, with semis imports reaching 3.23 million mt, up 27.9 percent. As a result, the net imports of crude steel came to 1.86 million mt in the first seven months of 2009.
Affected by the Chinese export rebate policy, China's steel exports jumped up considerably in July, but imports also grew strongly, thus still resulting in net imports of steel products. In July, the country's exports of finished steel were 1.81 million mt, up 380,000 mt or 26.6 percent month on month, while imports of finished steel totaled 1.74 million mt, up 110,000 mt or 6.8 percent month on month, with semis imports up by 190,000 mt or 50 percent to 570,000 mt. Thus, China's net imports of crude steel in July stood at 500,000 mt.
China's iron ore imports in July totaled 58.08 million mt, up 2.79 million mt or five percent month on month. From January to July, the country's iron ore imports totaled 355.25 million mt, up 85.64 million mt or 31.8 percent compared with the same period last year.