China dominating global steel market

Balli Steel, privately owned independent commodity trader, reports that China is expanding into the iron ore market and increasing its steel production capacity, against a backdrop of declining worldwide production. It estimates that China's steel production already stands at over 400 million tons for the first seven months of this year, compared with 560 million tons during the whole of 2008 and only 200 million tons as recently as 2000. Domestic consumption of steel has also increased sharply in recent years from just 25% of global production 10 years ago to nearly half today. However, increased supply has enabled China to become one of the leading exporters of steel, joining the ranks of the EU and Japan, with exports exceeding 20 million tons. Balli Steel highlights that three factors are currently driving China's growing dominance in the global steel market. The first is the scale of domestic demand for both industrial and construction steel, which is currently evenly balanced, with the latter a reflection of the property boom in leading cities, such as Shanghai, Beijing, Tianjin, Guanzho and Hong Kong. Real estate development grew by 10% in the first half of 2009 and automobile manufacturing grew by 16.4% during the same period resulting in increased demand for steel. The second factor is that the depreciation of the U.S. Dollar against the Yen and other world currencies is now reversing. In addition, other countries, such as Indonesia, are also seeing their currencies strengthen which is enabling their economies to stabilize adding to the demand for steel products. The final driver is that the slight upturn in demand, combined with the fact that restocking has occurred, has led to an upward pressure on prices. Steel billet prices have risen from $300 per ton two months ago to current levels of $450 per ton.Nike Kyrie 5