Chinese steel and iron industry has doubled its production in last four years, but it has become a cause of concern as the industry has pushed up the inflation.
According to the China Iron and Steel Association (CISA), the production of steel was recorded at 489.24 Million Tons and that of iron at 469.45 Million Tons in 2007, as reported by Forbes.
China maintained its top position of largest stainless steel produced in 2007 (its steel production was one-fourth of the global production). It surpassed Japan in production of stainless steel in 2006 and became the biggest producer in the world. Additionally, the steel alloy productivity also increased and reached to 16.6 Million Tons in 2007, high by 21.72% year on year.
Domestic and international markets of steel are creating huge demand for steel and iron, forcing increased production of both the elements. Biggest consumers of these two elements, infrastructure and automobile industries, are also witnessing high growth rate and putting pressure on the iron and steel industry to increase output.
Also, steel plant construction in China costs comparatively less than the developed countries due to cheaper technology and equipment, less energy cost, and cheap human resources. These factors are contributing to keep steel prices competitive among domestic and international producers.
However, consumption of steel in China is so high that being the biggest producer of steel, it could not fulfill its domestic requirements. It has to import steel from other countries and in December 2007, 1.33 Million Tons of steel was imported by the country.
China has doubled its production of steel in last four years, resulting in an increase in prices of iron ore and coal. This increase has impacted the domestic economy of the country and raised inflation significantly. As an inflation containment measure, the Chinese government is trying to rein the expansion of steel industry.
According to a Senior Research Analyst at RNCOS, “The demand of steel is running faster than the domestic production though China is the biggest producer of steel in the world. This has raised inflation in the country and now the biggest challenge before the government is to check inflation. As a short-term solution, the government has decided to cap the steel production. But it also has to ensure that steel production in the country matches the domestic steel demand.”
Related Market Research Reports:
European Aluminium Market Analysis
Global Nickel Market Analysis
China Steel Industry Forecast till 2012
