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China's steel demand drops in H1

08-03-2011 09:50 BJT

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Besides declining profits, Chinese steel makers are facing another major challenge - shrinking demand from major buyers in the auto, home appliance, and shipbuilding industries.

In this steel spot market in Shanghai, trading volume has dropped off significantly. The workers say summer used to be peak season. From 2003 to 2008, hundreds of trucks would line up outside and wait for hours to pick up their goods. But now, business is sluggish. Two production lines have even been suspended.

A worker from Shanghai Fumin Storage Company said, "After the spring festival, the factory has been working at only half capacity, two thirds of workers have been sent home - only one third is actually working."

Besides declining profits, Chinese steel makers are facing another major challenge - shrinking demand.

The main reason behind the bearish sentiment is declining demand from the auto, machinery and shipbuilding industries, which use steel as raw material. The growth of these industries have slowed - and with it, demand for steel. Insiders say the outlook is grim. Demand could further weaken in the second half of this year.

Zhang Changfu, Secretary General from China Iron & Steel Assoc. said, "The growth of the auto, shipbuilding and engineering machinery sectors are declining, and that indicates demand for steel will drop more. "

The growth of China's auto sales and output in the first half of this year decreased by nearly 30 percent compared with the same period last year. Another big consumer of steel, the shipbuilding industry is also seeing declining orders.

Besides declining profits, Chinese steel makers are facing another major challenge - shrinking demand.

Editor:Li Wanran |Source: CNTV.CN

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