The steel market in China benefits from the liberalization

The economic growth in China has been gradually slowing down over the last ten years. But, among others, due to the good performance of the export goods industry, it has remained quite robust. Additionally, new industries have been fuelling the vivid growth of the manufacturing industry and thus also the dynamism in the demand for steel. Accordingly, the forecasts for the steel usage and steel output are quite ambitious. The expected accession of China to the World Trade Organisation (WTO) increases the competitive and thus quality-related squeeze on the steel consuming branches of industry and their suppliers. This will spur the demand for high-grade steel, especially in the strongly export-oriented "new industries" which need very large quantities of flat steel products; an example being the highly dynamic automotive industry. As a result the share of flat products of the apparent steel usage will increase. Due to the lack of own capacities for the production of these steel grades, this is an interesting market not only for imports, but also for investments, partly with foreign participation, e.g. in the form of joint ventures, as is proved by the various activities of foreign investors in China. In the flat steel sector capacities are planned to be expanded by about 30 million t by the year 2005, hot rolled sheet accounting for 20 million t, cold rolled sheet for 9 million t and coated sheet products for 2 million t. During the same period, crude steel capacities are planned to be increased by 23 million t and in the five years thereafter, by 2010, by another 35 million t. This will be accompanied by a comprehensive restructuring process which will lead to the modernization and a boost in efficiency of the Chinese steel industry, bringing about a concentration of companies also with foreign participation.