China to see huge steel surplus: report
Updated: 2005-12-01 15:52
China will produce a surplus of steel next year equivalent to Japan's entire
annual output as demand from the once red-hot property sector cools, a top
government think tank said on Wednesday.
The world's largest steel producer and consumer could chalk up excess output
of 116.5 million tonnes in 2006, or about a third of forecast output of crude
steel this year, the State Council Development Research Center predicted.
It put the country's 2005 steel surplus at 43 million tonnes -- roughly level
with Germany's yearly production.
Large investments in domestic steel capacity have fomented a growing glut and
eroded world prices, hitting shares in major Asian producers such as Nippon
Steel Corp. (5401.T) and Baoshan Iron and Steel Co. Ltd. (600019.SS).
"The overcapacity problem
in China's steel industry cannot be solved next year, and that will further depress
steel prices," the think tank said in a report in the official China Securities
Global markets have long feared that China would emerge as a net steel
exporter, possibly triggering mill closures elsewhere with a flood of low-priced
The country became a net exporter in the first 10 months of this year,
selling 23.29 million tonnes of steel and steel products abroad, compared with
imports of 23.06 million tonnes, customs figures showed.
The think tank said Chinese steel supply, including imports, would
soar 48 percent to 453.4 million tonnes in 2006, versus expected demand of 336.9
Demand growth would also slow, particularly from the construction and
But exports in 2006 would slip 5.8 percent to 19.46 million tonnes amid
sluggish world prices and potential dumping charges against Chinese mills.
Imports are expected to climb 15.3 percent to 32.69 million tonnes.
U.S. steel pipe producers urged President George W. Bush
on Tuesday to restrict imports of competing products from China.