Straight from the Specialists
(The views expressed in this column are the author’s own and do not represent those of Reuters)
The 2011 outcomes in China’s steel and related industries have ratcheted up the risks faced in China’s and the world’s steel and steel-making raw materials industries in 2012. Q411 steel production in China was particularly weak, down 12 pct from the levels enjoyed in the first 3 quarters of 2011.
Steel elasticity in the quarter was negative, as GDP rose 8 pct while steel consumption fell 11 pct q/q. This raises questions whether the steel production patterns since October, annualising at 625mt to the end of January, are an aberration or a harbinger of much lower than expected steel outcomes in 2012 and beyond.
History cautions about the extrapolation of near-term weakness. Government policy response, seasonal factors, potential restocking and the improving global sentiment can turn Chinese steel outcomes quickly.