Chi Jingdong, the vice secretary-general of the China Iron and Steel Association (CISA), has remarked that since the beginning of 2010 domestic steel prices in China have been declining under pressure from high inventory levels.
As Mr. Chi outlined, the total crude steel output in China last year was 570 million mt, while the apparent domestic consumption of crude steel rose by 24.8 percent year on year to 565 million mt. However, real consumption failed to show a good performance. As a result, there are significant steel product inventories piled up in warehouses in China.
The CISA official went on to say that in 2009 the Chinese central government implemented a series of economic stimulus measures to boost the growth of domestic steel demand, and eventually succeeded in increasing demand for construction steel in particular. However, on the whole, as Mr Chi commented, programs in the transportation, energy and machinery industries accounted for a major portion of fixed asset investment in China in 2009, and it is hard to stimulate demand for steel products with such programs.
Mr. Chi added that, since the impact of the government's stimulus policies has abated somewhat, domestic steel consumption is not expected to show any recovery in the remainder of 2010.