Steel_industry_in_China Knowpia

The steel industry in China has been driven by rapid modernisation of its economy, construction, infrastructure and manufacturing industries.^[1]

History edit

20th century edit

The steel industry was small and sparsely populated at the start of the twentieth century and during both world wars. Most of the steel infrastructure was destroyed during the wars, and were using Soviet technologies.

During China's First Five-Year Plan period (1953-1957), industrial development was the country's primary goal.^[2]^: 67 The Plan's highest industrial sector priorities included power plants, steel, mining, machinery, chemicals, and national defense,^[2]^: 18 centered on steel and coal.^[3]^: 289 The First Five-Year Plan was significantly influenced by Soviet methodologies and assistance from Soviet planners.^[2]^: 68–69 Of the large-scale steel mills built or expanded according to Soviet-style planning, only Anshan Iron and Steel operated at a level close to the desired capacity by 1956.^[3]^: 299 In this period, the slow growth of steel production was a bottleneck in China's industrial development.^[3]^: 299

As a result, Chinese leadership mandated a major increase in steel production in late 1957 and early 1958.^[3]^: 299 These efforts included major investments in large scale steel manufacturing as well as the reorganization of urban labor in an effort to produce steel at other scales.^[3]^: 299

China underwent rapid economic industrialisation since Deng Xiaoping's market reforms which took place in 1978.^[4]

The steel industry gradually increased its output. China's annual crude steel output was 100 million tons in 1996.^[5]

21st century edit

China produced over 1 billion tonnes of crude steel in 2022, 52.9% of the world's total production,^[6] and up from 123 million tonnes (121,000,000 long tons; 136,000,000 short tons) of steel in 1999. After ascension to the WTO China aggressively expanded production for export and the growing appetite of local manufacturing industries such as automotive vehicles, consumer electronics and building materials.^[4]^[6]

The Chinese steel industry is dominated by a number of large state-owned groups which are owned via shareholdings by local authorities, provincial governments and even the central authorities. According to China Iron and Steel Association, The top 5 steel groups by production volume in 2015 are Baosteel Group–Wuhan Iron and Steel Corporation, Hesteel Group, Shagang Group, Ansteel Group and Shougang Group.^[7]

By 2008 raw materials such as Iron ore prices grew and China had to reluctantly agree to price increases by the three largest iron ore producers in the world; BHP, Rio Tinto and Vale.^[4] During the Global financial crisis the Chinese steel mills won price reprieves as demand from their customers slowed. When the demand started to pick up again in 2009 and in 2010, the price crept back up due to higher demand for automobiles, low interest rates, government fiscal stimuli around the world.^[8] Prices for iron ore were negotiated on an annual contract pricing scheme.^[9]^[10]^[11]^[12] Australian iron ore producers were not happy that iron prices did not reflect Spot market pricing. In 2010 pressure from BHP and Rio Tinto to move to a quarterly based index pricing succeeded.^[13] Many Japanese steel mills and Chinese steel companies had to follow as demand for raw materials heated up.^[13]^[14]^[15] Spot-basis pricing has caused problems for steel manufacturers such as exposing them to price fluctuation in the market and reducing the stability of resource supply. Steel mills prefer long term pricing to hedge against cost and maintain raw material supply stability.^[16] Rio Tinto has said it will cancel contracts and sell the steel on the spot markets if Chinese steel mills back down on the new quarterly pricing regime.^[16]

In 2011 China was the largest producer of steel in the world producing 45% of the world's steel, 683 million tons, an increase of 9% from 2010. 6 of 10 of largest steel producers in the world are in China. Profits are low despite continued high demand due to high debt and overproduction of high end products produced with the equipment financed by the high debt. The central government is aware of this problem but there is no easy way to resolve it as local governments strongly support local steel production. Meanwhile, each firm aggressively increases production.^[17] Iron ore production kept pace with steel production in the early 1990s but was soon outpaced by imported iron ore and other metals in the early 2000s. Steel production, an estimated 140 million tons in 2000 increased to 419 million tons in 2006. Much of the country's steel output comes from a large number of small-scale producing centers, one of the largest being Anshan in Liaoning.

China was the top exporter of steel in the world in 2008. Export volumes in 2008 were 59.23 million tons, a 5.5% fall over the previous year.^[18] The decline ended China's decade-old steel export growth. As of 2012 steel exports faced widespread anti-dumping taxes and had not returned to pre-2008 levels. Domestic demand remained strong, particularly in the developing west where steel production in Xinjiang was expanding.^[17]

On 26 April 2012 a warning was issued by China's bank regulator to use caution with respect to lending money to steel companies who, as profits from the manufacture and sale of steel have fallen, have sometimes used borrowed money for speculative purposes. According to the China Iron and Steel Association the Chinese steel industry lost 1 billion Rmb in the first quarter of 2012, its first loss since 2000.^[19]

As of 2015 the global steel market was weak with both Ukraine and Russia attempting to export large amounts of steel.^[20] Weak domestic demand in 2014 resulted in record exports of 100 million metric tons of steel by the Chinese steel industry.^[21]

Efforts by the Chinese Ministry of Environmental Protection under the Action Plan for the Prevention and Control of Air Pollution has resulted in pressure on steel mills in Linyi and Chengde to employ environmental protection measures on pain of being closed down.^[22]

In the context of lowered demand (see also 2015–16 Chinese stock market crash), in 2016 the Chinese state announced large scale closures and redundancies in heavy and primary industries, many of which were functioning as zombie companies, with 1.8 million redundancies (15% of workforce) in the coal and steel industries planned to take place by 2020.^[23]

List of companies in China edit

China Baowu Steel Group
Ansteel Group
Jiangsu Shagang
Hesteel Group
Jianlong Steel
Shougang
Shandong Iron and Steel Group
Valin Steel Group
Panzhihua Iron and Steel

References edit

^ "China Steel industry". Archived from the original on 10 April 2011. Retrieved 27 June 2010.
^ ^a ^b ^c Hou, Li (2021). Building for Oil: Daqing and the Formation of the Chinese Socialist State. Harvard-Yenching Institute monograph series. Cambridge, Massachusetts: Harvard University Asia Center. ISBN 978-0-674-26022-1.
^ ^a ^b ^c ^d ^e Harrell, Stevan (2023). An Ecological History of Modern China. Seattle: University of Washington Press. ISBN 9780295751719.
^ ^a ^b ^c "China's Steel Sector in Transition". Archived from the original on 21 February 2013. Retrieved 27 June 2010.
^ William Thomas Hogan, 2000 The Steel Industry of China, Lexington Books,ISBN 0-7391-0081-5, 978-0-7391-0081-3, 80 pages
^ ^a ^b "World Steel in Figures 2022". Retrieved 26 February 2023.
^ "World Steel Association - Top steel-producing companies". Archived from the original on 19 July 2016. Retrieved 26 July 2016.
^ Matthews, Robert Guy (1 June 2010). "Steelmakers Crank Up Output: Surging Production in China, Eastern Europe Puts Downward Pressure on Prices as Inventories Rise". Wall Street Journal. p. B1. ProQuest 2651616907.
^ "China iron ore price talks in chaos". Theage.com.au. 20 January 2010. Retrieved 25 June 2017.
^ "BHP Billiton in 'significant win' on iron-ore contracts". The Age. 30 March 2010. Retrieved 25 June 2017.
^ "Iron ore price fight | Herald Sun". www.heraldsun.com.au. Archived from the original on 30 December 2012. Retrieved 3 February 2022.
^ "Lateline Business – 30/03/2010: BHP moves to short-term ore contracts". Abc.net.au. 30 March 2010. Retrieved 25 June 2017.
^ ^a ^b "BHP strikes short term iron ore contracts | News.com.au". Archived from the original on 2 April 2010. Retrieved 27 June 2010.
^ Talek Harris (30 March 2010). "Mining titan BHP in landmark iron ore pricing move". News.smh.com.au. Retrieved 25 June 2017.
^ "BHP Treads Softly on Iron Ore Price Revolution". The Australian. Retrieved 25 June 2017.
^ ^a ^b Chambers, Matt (16 June 2010). "Rio threat to China steel mills". The Australian. p. 32. ProQuest 375460312.
^ ^a ^b "In China's Floundering Steel Sector, the Burden of Politics". New York Times. Reuters. 3 May 2012. Retrieved 4 May 2012.
^ Steel exports fall in 2008 – People's Daily Online. English.people.com.cn (12 February 2009). Retrieved on 6 August 2010.
^ Simon Rabinovitch; Leslie Hook (4 June 2012). "China warns on lending to steel plants". Financial Times. Retrieved 4 June 2012.
^ Manolo Serapio Jr. and Maytaal Angel (27 February 2015). "Cheap is king: Russia, Ukraine add to China steel export flood". Reuters. Retrieved 5 March 2015.
^ Neil Gough (11 March 2015). "For Chinese Economy, Steel Goes From Strength to Weakness". The New York Times. Retrieved 11 March 2015. China shipped a record 100 million metric tons of steel overseas in the 12 months to the end of February, a 55 percent increase from the previous 12 months.
^ "China Cracks Down on Steel's Smog". The New York Times. No. The New York Times. Reuters. 2 March 2015. Retrieved 5 March 2015.
^ Petricic, Sasa (3 March 2016), "Massive layoffs coming as China confronts its overbuilt 'zombie economy'", CBC News

Summary

History edit

20th century edit

21st century edit

List of companies in China edit

See also edit

References edit

Further reading edit