Urban trend a lasting boon for Chinese steelmakers
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With China's fast urbanization, its steel output won't drop until at least 2030, stimulated by long-term robust demand, industry experts said on Monday.
"China's steel production won't decline over the next 20 to 30 years because urban construction in west China still requires a large amount of steel," said Weng Yuqing, an academician at the Chinese Academy of Engineering and director-general of the Chinese Society for Metals.
The Ministry of Industry and Information Technology said this month that China will produce around 660 million tons of steel in 2011, a 5 percent year-on-year increase.
Last year, China produced 620 tons of steel, 9.3 percent more than the year before.
"Steel producers determine their annual output based on demand from the industry's downstream enterprises, whose business is involved mostly with urban construction, the direct embodiment of a country's industrialization," Lan Jie, a steel industry analyst at Industrial Securities, told China Daily.
Compared with the situation in developed economies like the United States and Europe, China still has potential for growth in steel production.
Its urbanization rate will hit 52 percent in 2015 and grow to 65 percent by 2030, according to the annual report on urban development by the Chinese Academy of Social Sciences.
The urbanization rate had already reached 46.6 percent by the end of last year, with 620 million people living in cities and towns.
Research by the China Commodity Marketplace website shows that the urbanization rate in developed economies is currently 75 percent, compared with 38 percent in developing economies.
The Chinese Society for Metals said the nation's steel production will continue to increase but at a pace that will slow down within the next few years as the urbanization rate reaches a level close to that of developed economies.
Lan said steel manufacturers may have to face the challenge of production surpluses and fluctuating steel prices in the future. Innovative technology is a crucial competitive skill for steel manufacturers that want to maintain rapid development in a stable market.
On Monday, the China Iron & Steel Research Institute Group introduced its third generation of automobile steel, which is four times as strong as the previous generation.
Companies involved in the automotive and the steel industries, including General Motors Corp, Shougang Group and Wuhan Iron & Steel (Group) Corporation, have shown great interest in the technology and have sought to buy new generation auto-steel products, said Cai Rang, general manager of China Iron & Steel Research Institute Group.
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