Stabilizing forces set to prop up the steel sector

In addition, China used to export steel products to other developing countries, including India, Vietnam and Indonesia, which now are working on building their own steel production projects.

That will affect China's steel exports to some extent, said Li.

Steel sector still facing profitability problems

In 2013, China exported 62.34 million tons of steel products, up 11.9 percent year-on-year. Export volume to India, Thailand and South Korea all declined compared with the previous year, while exports to countries including Vietnam, the Philippines and Malaysia increased, according to the institute.

In terms of the domestic market, there are some aspects that will help slow the country's steel consumption.

According to the 12th Five-Year Plan (2011-15), China will build 36 million affordable apartments, which translates to 10 million affordable apartments added annually in the near term.

That construction will increase domestic steel use.

The central government plans to invest no less than 1.4 trillion yuan in boosting railway infrastructure over the next two years. The key area for this investment will be the western region, which will raise steel use in the area.

The nation's machinery industry is predicted to achieve 12 percent growth in production and sales this year, the China Machinery Industry Federation said.

Cai Weici, vice-president of the federation, estimated that, starting this year, the industry's growth rate will start to stabilize.

Li predicted that the sector will consume about 140 million tons of steel products, up 5.3 percent this year.

The auto sector will consume 50.7 million tons of steel this year based on the sector's steady growth.

The energy sector, as well as shipbuilding and electronic appliances, also will see a slight uptick in steel consumption.

 

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