Chinese high crude steel production is adding significant profit to the shipping industry.
Today, China is the major crude steel producer in the world. Its international trade is improving the logistics and adding profit on country’s economy. “Steel production in China is highly dependent on Iron ore smelting”, said Wang Yingsheng, Director of Industry Research, Department of China Iron & Steel Association (CISA), in World Shipping (China) Summit 2013.
In September 2013, Iron ore production in China was 136.6 MnT which is a rise of 4 per cent Y-o-Y. It added CNY (Chinese Yuan Renminbi) 1.04 billion in the first nine months of current year, which is 6.7 per cent more than previous year.
Shipping industry and iron ore industry in 2010 were alike. Freight rates fell substantially after the financial crisis, although iron ore price remained high. Analyzing past 4 years, it was observed that every year international freight rates of shipping industry bounces back in August-October, followed by iron ore price hike.
Wang also discussed on Chinese steel export & imports (EXIM) and coking coal imports. Steel (EXIM) in China remained at 70 MnT except for 2009 in the past few years. China’s coking coal imports increased significantly and stand at about 50 MnT, after the breakout of financial crisis. The large quantity of China steel EXIM and coking coal imports, greatly emphasize development of international shipping industry.
It can be inferred that, steel consumption in China is going to hit the highest point and crude steel production might increase. Scrap recovery may increase but steel making will greatly dependent on Iron ore smelting. As a result Iron ore imports will stay high. In addition, as the Iron ore production in countries like Australia improves, China might just source a good share out of them.