China’s steel demand declined in January-July, Cisa says

China's apparent steel consumption has fallen so far this year, as more of the material produced was exported or ended up in inventories, China Iron & Steel Assn (Cisa) said.

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“Many are saying that China’s growth of crude steel consumption is slowing down, but the fact is that absolute demand has faltered, due to the reduced demand from downstream industries,” Wang Xiaoqi, Cisa’s deputy secretary-general said.

“Though China’s crude steel output has increased, the increases in net exports and steel inventory overweigh steel output,” Wang said at a Umetal iron ore conference in Suzhou.

Absolute steel consumption has actually dropped by 3.6% year-on-year, he added.

China’s net exports rose 4.3 million tonnes during the first seven months of 2012.

Stocks at steel mills of Cisa members by the end of July totalled 12.20 million tonnes, with an increase of 3.2 million tonnes, and social stocks in 26 cities monitored were at 15.38 million tonnes, up 1.5 million tonnes, Wang said.

The figure for stocks at mills only represent about 80% of the total and the figure for social stocks covers 67% of steel product types and 40-45% of cities, he added.

China’s crude steel output increased in the January-July period.

The country’s steel production capacity has reached 940 million tpy, while production capacity utility rate has fallen to 70%, which indicates a huge surplus, and steel mills are highly fragmented, Wang said.

“The steel market could only bottom out after some outdated and inefficient capacities retreat, and it would take a very long time,” he added.