Steel Cutbacks Hit Asia
China’s steel exports, which had been expanding at an extraordinary pace of 60% a year, are now falling as demand declines worldwide. Weakening Chinese exports of home appliances and machinery have cut demand for steel, as has a collapse in the Chinese housing market that triggered sharp declines in construction, The Wall Street Journal reports.
This is the biggest downturn for China's steel industry in at least a decade, with its output plunging 17% in October. China's steel industry grow at a record pace in recent years, is now five times bigger than it was during the last contraction, producing more than a third of the world's steel.
Japan's Nippon Steel Corp., the world’s second-biggest steelmaker by output after ArcelorMittal, said it will extend production cutbacks to more than two million metric tons in its fiscal second half through March from one million tons, and didn't rule out more cuts in the future.
Taiwan’s China Steel Corp., which sells as much as 75% of its production in the domestic market, said it will cut domestic steel prices in the first quarter of 2009. China Steel also said it expects 2008 production to be as much as 10% below last year's production of 10.19 million tons, and plans to push forward a maintenance shutdown at one of its blast furnaces to the first quarter, essentially cutting output by another 25% during the quarter.
India’s steel prices have been reduced since July by one-third. Indian steel companies have cut prices between 15% and 20% earlier this month and analysts feel another cut is likely soon. Indian steel imports slowed in October, down to one-third from the previous month, Indian government data showed. Analysts said imports are still cheaper than local steel by about 5% to 10% as China’s steel prices have slumped in the past couple of months.
China’s steel industry output is likely to shrink marginally this year, perhaps by 1% to 2%, and be flat in 2009, according to industry analysts. But coming after seven straight years of growth more than 15%, that is a sharp correction, the WSJ said. ❖