Economy

CISA Predicts Chinese Steel Consumption Will Drop 6% in 2015

May 20, 2015

The China Iron and Steel Association (CISA) says steel consumption in China will fall approximately 6 percent this year. The forecast is lower than was predicted by the Australia and New Zealand Banking Group (ANZ) which anticipates consumption to fall 4 percent this year, followed by 2 percent in 2016.

Wang Liqun, vice chairman of CISA told an industry conference that the slowdown in the world’s No. 2 economy will continue to hurt industrial demand.

China crude steel consumption fell for the first time since 1981 when it dropped 3.4 percent last year. In the first four months of 2016 crude steel output fell 1.3 percent to 270 million tonnes, according to government data.

Steel oversupply has been a continuing problem in the country with overcapacity estimated at around 300 million tonnes.

According to Liqun the oversupply drives prices lower and cuts profits for steelmakers and miners.

There is no winner at all,” he said, “the profit margin has dropped significantly.”