Growth in Chinese steel consumption is expected to slow markedly in the second half of this year amid weakening demand from the construction, household appliance and automobile industries, according to industry experts.
Yang Siming, general manager of Nanjing Iron & Steel told a steel conference in Xiamen this week that most Chinese steel mills had cut output last month, because of shrinking demand and high costs of raw materials.
”We’ve been cutting production since last month, and according to my knowledge, most domestic mills are cutting output too,” Mr Yang said.
According to Steel Business Briefing, the steel consultancy, steel consumption in China is forecast to grow by only 8-10 per cent in the second half of this year, as little as half the 16 per cent growth rate for the first half of 2008.
Analysts predict that the reopening of steel mills that were closed during the Beijing Olympic games will do little to boost second half output.
Charles Huang, an analyst at BNP Paribas in Hong Kong, said that a lot of steel mills have closed in the last 12 months. But he added that “this has more to do with government orders to close down heavily polluting and inefficient producers than with the Olympics”.
Mr Huang said that a wider problem in the Chinese steel industry “is not capacity: it’s a slowdown in demand for steel products”.
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