Demand surge for niche steel products to be boon for China mills

reuters.com Production & Sales,  Steel Products 2020-04-09 08:50:52

China's steel companies are banking on rising demand in 2020 for high-end, and higher priced, specialty metal products for use in new infrastructure projects to revive an economy that was already slowing before the recent coronavirus outbreak.


As much as 2.8 trillion yuan ($396.75 billion) of local government bonds have been pledged for metal-intensive projects designed to stimulate economic growth, including new light rail systems, energy grid upgrades and an accelerated roll-out of 5G network installations.


Li Xinchuang, chairman of the China Metallurgical Industry Planning and Research Institute (CMIPRI), a government think-tank, expects new infrastructure projects to increase direct demand of specialty steel products by around 33 million tonnes this year, or roughly the annual output of Brazil, the ninth-largest steel producer. Li did not give a 2019 figure.


However, the China Special Steel Enterprises Association, which uses a stricter definition of specialty steel, said output in 2019 was roughly 12% of the China's crude steel production of 980 million tonnes or about 118 million tonnes. China is the world's biggest steel maker, with 1.2 billion tonnes of steel product output in 2019.


"The new infrastructure projects require more high performance and value-added steel," Li said last week. "They not only call for the structure, but also function of steel products."


Specialty steel includes products with other metals content and a different proportion of carbon that require additional smelting and processing and have higher physical performance than normal steel products such as rebar used in construction.


The products include items such as L-shaped, or angle, steel as well as electrical steel, an alloy that includes small amounts of silicon and is used to reduce power losses in electrical equipment such as transformers.


L-section steel averages about 4,000 yuan/t compared to about 3,350 yuan/t for rebar.


(Writing by Emma Yang  Editing by Tammy Yang)
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