China’s auto industry will see stable demand for steel in 2014

China’s auto manufacturing industry is expected to see steady growth in 2014, thus ensuring stable demand for steel products, according to the China Assn of Automotive Manufacturers (CAAM).

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“The country’s auto industry development has entered a period of steady growth, and the annual growth rate for 2014 is estimated to be 5-8%, which means around 23 million units of vehicle sales,” the association’s vice-secretary-general Gu Xianghua said at an industry conference in Tianjin last week.

The forecast is based on the fact that Beijing is aiming to maintain a stable GDP growth. Fixed asset investment is expected to increase on the back of that, driving the demand for commercial vehicles including heavy trucks, he explained.

Apart from that, Beijing’s target to double average annual income for lower and middle-income workers by 2020, along with its policy of expanding domestic consumption, could also help boost auto demand, he added.

“The steady growth of the auto sector, a major downstream user of steel, will continue to lend support to the steel industry in the next few years,” Gu said.

For the short term, he expects China’s auto sales to increase by 10-12% to exceed 22 million units this year, which is higher than CAAM’s forecast at the beginning of this year of a 7% annual growth.