Posted on 02 Oct 2015
Austrian steelmaker Voestalpine said it expects the downturn in Chinese steel demand to last for some time, adding there will likely be more trade cases alleging China is dumping or exporting steel at below fair value.
A slowing Chinese economy has shrunk demand for steel in the world’s top consumer of the alloy, forcing its firms to rely on exports, limiting their demand for steelmaking ingredient iron ore, and causing severe stress for global miners.
“It seems that we will see for some time a downturn in Chinese steel demand, at least there are indications in that direction,” said Voestalpine CEO Wolfgang Eder, who is also chairman of the World Steel Association industry body.
Demand for steel in China, which accounts for half of global consumption, fell 3.3 percent last year, shrinking for the first time since 1981, and has continued to fall this year. Much debate remains over whether China has reached ‘peak steel’.
Miners including BHP Billiton and Rio Tinto expect China to reach peak production in the mid-2020s to 2030. They continue to churn out vast amounts of ore, even as prices .IO62-CNI=SI have slid to below $60 a tonne from almost $200 in 2011.
At the same time, China is exporting steel at record levels, sending prices ST-CRU-IDX to their lowest in over a decade.
This week, Britain’s second largest steelmaker SSI UK mothballed its only UK plant and axed almost its entire workforce.
“It is a matter of fact that Chinese exports are putting pressure on steel prices everywhere in the world. Of course this means we’ll see further trade cases coming up because people feel China is dumping in several markets,” said Eder
“In southern Europe we see steel coming in from China around 300 euros per tonne what is significantly below the cost of the most efficient producer of commodity grade steel in Europe,” he added.
China’s exports are likely to exceed 100 million tonnes this year, according to the China Iron and Steel Association, after rising 50 percent last year to a record 93.8 million tonnes.
Steel trade cases have risen around the world. This week, Mexico became the latest country to announce duties following a simmering dispute with China.
On a separate note, Eder said he did not expect the Volkswagen emissions scandal would damage demand for automotive steels.
