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China’s economic slowdown control the global steel industry trends (1)

Global
steelmakers are now beginning to emergency brakes to cope with bleak prospects
for short-term needs. According to the International Iron and Steel Institute,
in November the world’s largest steel production reduced to an annualized rate
of 1.405 billion tons, the lowest level this year.
    Global crude steel production in
November over the same period last year increased only 1.1%, well below the
growth rate of 6.2% in October; the industry’s capacity utilization fell to
73.4% two-year low. Weak trend in production in Africa and Oceania have been
quite obvious for a long time, reflecting the political instability in North
Africa and
Australia,
manufacturers of large-scale restructuring of the business. African side, 1-11
monthly cumulative reduction was 15%; year yield fell 9% in Oceania.
But in the steel industry, Africa and Oceania,
but is negligible.
    China’s economic slowdown, while
the European economy seems inevitable have reoccurrence of a recession, these
two factors combined control the global trend.
    November, China’s steel
pipe
production actually declined over the same period last year.
Although only marginally decrease 0.2%, still is the first decline this year,
while still had double-digit growth in September. In addition, this slow down
situation seems to continue.
    International Mould & Metal &
Plastic Industry Suppliers Association secretary-general Luo Bauhui said China’s steel tube production decline reflects the overall
economic slowdown, especially in tight credit conditions, and the city
government is trying to squeeze in speculative real estate bubble. Growth rate
of China’s
real estate development from January to July this year, slowed to 33.6% from
January to November’s 29.9%. Price increase is down, the average price of new
homes in November consecutively fall. Although it¡¯s good news for the long-term
health development of China’s
economy, it¡¯s the adverse short-term outlook for the steel industry, due to the
performance of the industry and the construction of solidarity.
    Government to promote the
construction of more affordable housing, and perhaps will bring some long
products producer relieved, but still not enough to offset the slowdown in
housing construction activities in the overall trend of adverse effects. As the
government has vowed not to relax the regulation and control, China’s steel
production will not be much short-term boost, especially weak in the
construction industry, while manufacturing also slowed, and the export
prospects become bleak.
    Internationally, the EU steel
production in November decreased 2% by a year earlier, for the second
consecutive monthly decline, as more and more European companies cut
production. Like China,
the possibility of picking up in a short-term is little.
    The market form an increasingly
strong consensus: the European Union even without a recession, it is headed
toward recession. Now there will be more deep recession problem. The answer of
this question depends on whether European leaders can stop the spread of euro
area credit crisis. The answer seems obvious.
The bright spot in downturn
    In the doldrums, some highlights
worth mentioning. One of the most important is North
America. November North America increase was still a strong level
of 12%, mainly reflecting the steady performance of the United States, the U.S. output growth continues to
expand, January to November increase 7 percent. This is closely related to the U.S. economy. U.S. recovery may become stop and go, but at
least the U.S.
is still growing. Other important highlights of Turkey
and South Korea
are two countries which are important steel-producing countries, have the
cumulative growth rate in double figures, close to 20%. The problem is caused
by the global weakness in Europe, how long
cans this dazzling performance last? Do not forget, iron and steel production
is a lagging indicator.
2012 iron and steel enterprise merger and reorganization efforts will
strengthen

    China’s steel industry is the fastest growing industry over
the past decade. According to statistics, China’s crude steel output in 2010
reached 627 million tons, accounting for 44.3% of world production, more than the
sum of the second to twentieth. Steel industry in 2011 encountered
unprecedented difficulties, industry profit margins fell to freezing point, the
vast majority of manufacturers were at a loss, but the Chinese steel industry’s
overall production was still rising.

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