BEIJING Jan 14 China's annual steel output
growth is expected to slow in 2014 to around 3 percent and reach
810 million tonnes as a result of changes in its economic
strategy, the head of the country's steel association said in
comments published late on Monday.
Chinese steel production has surged to nearly half the
world's total in the past two decades as a result of breakneck
economic growth, but Beijing is now determined to slash the
excess capacity weighing down the sector as well as reduce the
country's overall dependence on heavy industry.
Output in the first eleven months of 2013 reached 712.9
million tonnes, up 7.8 percent on the year, according to the
latest figures from China's statistics bureau.
But Xu Lejiang, the new chairman of the China Iron and Steel
Association (CISA), said the era of rapid growth in the Chinese
steel industry had already come to an end, bringing longstanding
problems like overcapacity into sharper focus.
"With the steady advance of urbanisation, steel product
demand will continue to see a certain amount of growth, and we
predict crude steel output will reach 810 million tonnes and
apparent demand 750 million tonnes in 2014, rising around 3.1
percent," he said in a speech to association members on Sunday.
"But because of overcapacity, a slowdown in fixed asset
investment growth and slowing demand growth for downstream
products, the oversupply situation isn't likely to change much."
According to a transcript of the address published in CISA's
official website (www.chinaisa.org.cn), Xu said profits in the
sector were likely to remain low for the foreseeable future,
with environmental and raw material costs also still rising and
competition from other emerging steel producing nations expected
Xu, also the chairman of leading steelmaker Baoshan Iron and
Steel Group, the parent of Baosteel, has previously
claimed that the problems in the steel sector were brought about
by local government interference, with soft loans and
preferential supply contracts creating "huge monsters" that had
been saddled with too much production capacity.
He said in his weekend address that China's new economic
reforms would reduce the role of the state in the allocation of
resources, and that steel firms could only emerge from their
current difficulties by becoming more responsive to the market.
(Reporting by David Stanway; Editing by Muralikumar