China's Steel Threat May Be Excess, Not Shortage
For much of the past two years, China has threatened to foster a world steel shortage with its prodigious appetite for imports of the metal. Now the country has become a net exporter, its domestic demand is slowing and steelmaking capacity is up around the world, sparking concern over global oversupply and tougher times for the industry in the years ahead.
Behind China's shift is a sharp slowdown in the growth of steel consumption at home combined with continued increases in production. As Beijing has worked to cool an overheated economy, the growth in domestic demand for steel recently has been rising only about 5% a month compared with year-earlier periods, after average monthly increases of 26% in 2002, 2003 and early 2004, according to UBS AG.
Meanwhile, UBS estimates that Chinese steel production will climb 22% this year to 268 million tons, and grow a further 14% next year to 305 million tons. In November, China reported net exports of more than one million metric tons of steel, more than double October's level and a reversal from November 2003, when it was a net importer of nearly three million tons.
China's emergence as a net steel exporter and rising capacity elsewhere highlights how quickly global commodity flows can shift directions. It also raises the question of whether China could as quickly reverse the trend and again squeeze global steel supplies. China in recent years has added so much new production of some raw materials, such as coal and aluminum, that even minor shifts in its economy could force it to dump unneeded supply on to the global marketplace, potentially sending prices down as quickly as they have gone up.
Lower steel prices could be a boon to manufacturers, builders and consumers world-wide, helping to reduce costs in the plant and prices at the cash register. The impact on steelmakers is less rosy, especially in the U.S. While the American steel industry is in better shape, after a wave of bankruptcies and consolidation, to cope with oversupply, the U.S. would be at a big disadvantage against steelmakers in lower-cost countries. In addition to China, production in lower-cost regions like India and Eastern Europe has been surging in recent years. And when the dollar's weakness reverses, imports will look more attractive to U.S. customers.
For now, analysts and executives see a clear movement toward rising capacity in China and world-wide, though they disagree on how soon large amounts of new steel will reach the market and how much of a price squeeze global producers face.
Just a few years ago, the steel industry was slogging through a decades-long downturn, caused in part by overcapacity. That changed in 2003 and 2004, as manufacturing picked up world-wide, but especially in China, where construction projects far exceeded expectations. A global squeeze on steel supplies this year led to panic buying that caused steel prices to double and triggered shortages of steel-making raw materials such as iron ore, coking coal and scrap steel.
Now, many governments are using subsidies, loan guarantees and other tools to promote more steel production to capitalize on the increased demand in China and elsewhere. The North American Steel Trade Committee is worried that some 250 million metric tons of new steel capacity are on track to be added in the next five years in a global market that currently produces about one billion tons annually.
China now exports large amounts of lower-quality steel, of the type used in construction. Supplies of higher-quality steel, of the kind used to make cars and trucks, remain tight -- Nissan Motor Co. and Suzuki Motor Corp. both had to temporarily halt production when they couldn't find enough steel in recent weeks. But China has been ramping up its capacity to make more high-quality steel as well.
Excess Chinese steel might not dent world prices right away. But rising Chinese exports would almost certainly affect other markets eventually, stoking competition as steel producers that had sold to China vie for sales elsewhere.
Some steel users say they are already seeing the impact of greater production and slowing demand in Asia. Among them is Pan Australian Resources Ltd., a mining concern based in Brisbane, Australia, that is building a $15 million gold-processing facility in northern Laos. Steel products account for as much as 10% of the facility's cost.
When Pan Australian priced the project this summer, suppliers appeared to be padding their estimates in the expectation that steel costs would continue to rise. But now that it is taking delivery of the steel, the company is finding prices are more than 10% below estimates.
"It looks like their order books have thinned out, so they need to be more competitive," says Joe Walsh , a Pan Australian spokesman.
And more capacity is on the way. Despite its announced intention to rein in excess steel investment earlier this year, the Chinese government recently approved a $2.5 billion plant expansion for Maanshan Iron & Steel Co. the country's fifth-largest steel producer, to make more steel for cars and home appliances. It also approved a $2 billion expansion for stainless-steel maker Taiyuan Iron & Steel.
State-run media have reported that China's largest steelmaker, Baosteel Group, is considering a $10 billion expansion to build a 10-million-ton-a-year plant in Guangdong province, pending government approval. Baosteel officials declined to comment on the plan. Baosteel has started construction on a stainless-steel plant in Guangdong that would be the biggest stainless-steel processing and distribution center in China when finished.
"It doesn't take too much imagination to look at what's happening in China and say that this is a really serious issue," says Peter Hickson, a steel analyst at UBS in London, who believes that steel prices could fall nearly $200 a ton over 2005. The U.S. industry expects prices for cold-rolled steel, a type commonly used in everything from dishwashers to automobiles, to be about $800 a ton in early 2005. Mr. Hickson's bank recently downgraded the global steel sector to "neutral" from "buy," in large part because of worries over China.
Still, some analysts contend that concerns about a steel overhang are premature. Many of the new expansions won't be completed for a long time and some might not happen at all if steel prices drop and supplies of raw materials for steel remain tight.
"I think there is a little too much concern about announced new capacity," says Dan DiMicco, chief executive of Charlotte, N.C.-based Nucor Corp. "You can build steel mills but you can only run them if you have raw materials."
Kim Soo Jung, a spokeswoman for Posco, the large South Korean steelmaker, says, "We can't say we're not concerned about the increased production volume in China," she says. "If they don't stop producing [so much], that will cause overcapacity."
Even so, Posco is considering its own expansions, including a possible $8.4 billion joint venture with Australia's BHP Billiton to build a steel-slab plant in India with capacity for 10 million tons a year. As recently as 2001, Ms. Kim says, Posco was the world's biggest producer of steel in terms of volume, but it has lost that status after other steelmakers expanded through a series of mergers. "If we want to continue to be a leader in the industry, we need to expand our capacity," she says.
Chinese officials emphasize that their latest expansions will be aimed at serving the high-grade steel market rather than users of lower-grade construction steel. Wang Xiaoguang, head of the economic operation and development research department at China's State Development and Reform Commission, predicts that China's steel output will only increase 10% to 15% next year, compared with more than 20% in recent years.
The U.S., for its part, remains a net importer of steel, taking in about 30 million of the 130 million tons of steel it consumes each year. A few companies, such as Nucor and Fort Wayne, Ind.-based Steel Dynamics Inc. have expanded existing capacity this year for certain types of steel. But that additional production roughly offsets steel-making capacity that disappeared from the U.S. between 2000 and 2003, when almost 40 companies declared bankruptcy.
全球钢铁市场：成也中国，败也中国
这一年来中国在全球市场大批买入钢铁，让生产商们赚得盆满钵满，而其他钢铁用户则叫苦连天。但成也萧何，败也萧何，未来中国可能也会导致全球钢铁供应供大于求。
中国钢铁消费需求增长的急剧下滑以及国内钢铁厂建设的遍地开花，已使中国从一个钢铁净进口国变成了一个净出口国。11月份，中国净出口钢铁100多万吨，比10月份增加一倍多，而上年同期为净进口近300万吨。而根据国际钢铁产业协会(International Iron & Steel Institute)的数据，全球第六大钢铁净进口国德国2002年全年净进口只有690万吨。
中国是全球最大的钢铁生产国，也是最大的消费国。
中国政府为经济降温的举措已导致钢铁需求的放缓，据瑞银(UBS AG)的数据，中国钢铁月消费量较上年同期仅增长了5%左右，而2002年、2003年以及2004年年初的平均月增幅为26%。瑞银还估计中国的钢铁产量今年将增加22%，达到2.68亿吨，明年再增长14%，达到3.05亿吨。
中国钢铁出口的增长以及国内经济的放缓，已在一些钢铁生产商中引发了钢铁热潮可能逆转的担忧。“短期内，中国经济增长对于北美（钢铁）行业是个利好，但中长期来说这令人担忧，”美国钢铁产业协会(American Iron and Steel Institute)的会长夏基(Andrew Sharkey)表示。
在建筑用的低品质钢铁市场中，中国现在是净出口国，但轿车、卡车用的高品质钢铁市场供应依然紧张，日产汽车(Nissan Motor Co.)和铃木汽车(Suzuki Motor Corp.)11、12月份不得不停工几天，原因就是钢铁供应不足。但中国也在扩大高品质钢铁产能以及钢铁生产原材料（如煤炭）的产能。
中国成为一个钢铁净出口国，凸现了全球大宗商品供需趋势的变幻无常，虽然需求并没有出现明显的变化。今年来，中国的煤炭和铝等部分原材料的产能大幅增长，这可能会迫使其将富余的部分原材料推向全球市场，导致市场价格如当初飞速上涨一样迅速下跌。
中国钢铁供应的过剩可能不会立即影响全球价格。而且，钢铁行业中的一些人也指出，钢铁生产所需的许多原材料依然供应紧张，因此不管有多少新工厂投产，钢铁产量都将受到抑制。但中国钢铁出口的增加无疑会逐步影响到其他市场，对华出口的钢铁生产商们将不得不转向美国和欧洲等其他地区的买家。
事实上，一些钢铁用户表示，他们早已感受到了亚洲产能增加和需求放缓的影响。澳大利亚矿业公司Pan Australian Resources Ltd.就是其中之一，该公司正在老挝北部建造一个1,500万美元的黄金加工厂，钢铁占该厂建造成本的10%之多。
Pan Australian今夏为这个项目估价时，供应商们在估价中预计钢铁成本将继续上升。但现在随著钢铁交货，Pan Australian发现钢价比预期低10%以上。“看来（钢铁生产商们）的订单已减少了，因此他们需要加强价格竞争力，”Pan Australian的发言人华尔希(Joe Walsh)表示，成本下降意味著“我们的项目投资回报率将提高”。
更多的产能扩张仍在筹划中。中国政府今年早些时候虽然宣布要控制钢铁投资过热，但最近仍批准了国内第五大钢铁生产商马鞍山钢铁股份有限公司(Maanshan Iron & Steel Co.)25亿美元的工厂扩建计划，专门生产轿车和家用电器用钢。此外，中国政府还批准了不锈钢生产商太原钢铁(Taiyuan Iron and Steel)20亿美元的扩建计划。
据中国国有媒体报导，中国最大的钢铁生产商上海宝山钢铁集团(Baosteel Group)正在考虑一个100亿美元的扩张计划，在广东建设一个年产1,000万吨的工厂，此项目还有待政府的批准。宝山钢铁集团官员拒绝对此计划发表评论。此外，宝山钢铁集团已开始在广东建设一个不锈钢厂，建成后这将是中国最大的不锈钢加工和分销中心。
“从中国目前的情况不难想像这是一个多严重的问题，”瑞银驻伦敦的钢铁分析师希克森(Peter Hickson)表示。瑞银最近将全球钢铁类股的评级从买进下调至中性，主要就是因为中国引起的担忧。
不过，一些分析师仍认为，担心钢铁业出现供应过剩仍为时过早。许多新的扩张计划要很长一段时间才能完成，而且如果钢价下跌，一些计划可能就会被取消。而且，钢铁业管理人士相信，铁矿石、焦炭以及废金属等原材料供应短缺也会限制新产能效应的发挥。
“我认为，人们对新产能的担忧有些过度了，”北卡罗来纳州Nucor Corp.的首席执行长迪米克(Dan DiMicco)表示，“你可以建钢铁厂，但没有原材料这些工厂也不能运转。”
仅仅几年前，钢铁行业还深陷于长达10年的不景气中，直到2003年和2004年随著全球（尤其是中国）制造业的普遍提速，才出现了改观；中国的摩天大楼和基础设施建设所需钢材大大超出了预期。2004年全球钢铁供应短缺导致了恐慌性采购，钢铁价格增长了一倍，钢铁生产所需的原材料供应也出现了短缺。
“我们不能说全然不担心中国产量的增加，”韩国大型钢铁公司浦项综合制铁公司(Posco)的发言人Kim Soo Jung表示，“如果他们不停地这样生产，必然会导致产量过剩。”
但即使是这样，浦项仍在考虑扩大自己的产能，包括可能和澳大利亚的必和必拓(BHP Billiton Ltd.)合资84亿美元，在印度建设一个年产1,000万吨的钢板厂。Kim表示，近至2001年，浦项还是全球钢铁产量最大的公司，但后来一些竞争对手通过一系列的并购夺走了第一的位置，“如果我们想保持业内的领先地位，就得扩大产能。”
中国官员强调最新的扩张计划意在高品质钢铁市场，而不是低品质建筑用钢。中国国家发展和改革委员会经济研究所经济运行与发展研究主任王小广预计明年中国的钢铁产量将仅增长10%至15%，低于今年的20%多。
