China Faces Overcapacity of Steel Industry

China is to cut the annual production capacity by 100 million tons of iron and 55 million tons of steel in the coming five years, in a bid to cool down the overheated steel industry, an official said Tuesday.
China is now the world's biggest steel producer and consumer. Its annual steel output is equivalent to those of the United States, Russia and Japan put together.
Last year, the country produced 348 million tons of steel out of its annual capacity of 470 million tons, said the official of the National Development and Reform Commission (NDRC).
According to a recent survey of the commission, China has 1,499 steel companies. Only 15 of them have an annual production capacity of more than 5 million tons each and 40 others, 1 million to 5 million tons.
However, more steel companies are under construction or on the drawing table of planners.
All this indicates steel supply will be much more than the expected demand though large amounts of steel products will be needed to support the country rapid development, said the official.
The majority of the steel projects under construction was started up by local governments without the approval of the central authorities, added the officials.
The survey also shows that low-grade steel products are overstocked while high-end products such as plates for car and consumer electronics production are in short supply.

China’s Ever Largest Export Contract for Metallurgy Plants Completed Financing Deal

China Minmetals and China Metallurgical Construction Group Corporation announced on January 9th that a financing deal was completed to provide Brazil GERDAU ACOMINAS with whole set of metallurgical plants that included blast furnace, sintering furnace and coke oven. BNP Paribas and Industrial & Commercial Bank of China will offer a buyer credit worth of $200 million.

Govt to invest more on railway construction

China plans to input a total of 160 billion yuan (about 20 billion US dollars) on railway construction in 2006, Minister of Railways Liu Zhijun said here Friday.
At the national railways working conference in Beijing, Liu said the construction of 13 new express passenger rail routes will start this year, with the pace of another 11 rail routes under way to be accelerated.
The year 2006 will witness a large-scale railway building momentum in China, said Liu, noting that the ministry will launch a total of 87 railways projects this year.
As a step to renovate part of the country's outdated low-speed railways, a total length of 3,860 electrified rail routes will go into service across the country in 2006, Liu said.
Meanwhile, two key projects of the railways sector will become operational in 2006, said the minister, one is the highest-latitude Qinghai-Tibet Railway which will go into trial operation in July, and the other is the electrified Beijing-Shanghai Railway to be in service in the year.
Preparations for China's sixth large-scale speed-lift for railways are also scheduled to be completed before October this year, the minister said.

Ningbo Ports Exported Steel of 69,000 tons during January to November in 2005

According to Ningbo Customs, export of finished steel via Ningbo ports stood at 69,000 tons during January to November in 2005 with export value of USD$110 million, up 22% and 38.6% respectively in comparison with the same period of the previous year.
The customs warned of potential trade barriers from USA and Europe under WTO rules as export volume of wire and sheet accounted for 58.8% of the total steel outflow through the region, ie. 23,000 tons, up 32% and 17,000 tons, up 42.5% respectively.

China hails Bush's rejection of quotas on steel pipe

The Chinese Government welcomed the rejection by U.S. President George W. Bush of a request to impose quotas on steel pipe imported from China, a spokesman for the Ministry of Commerce said Monday.
This is the fourth time that the president decided not to place quotas on Chinese exports to the United States, the spokesman made the statement on the website of the ministry.
The decision of the U.S. government is conducive to the bilateral economic and trade relations, said the spokeman.
Explaining his decision, President Bush said Friday the cost to American consumers would outweigh the benefit to domestic producers.

China's 1st 100-mln-ton coal base debuts

China's first 100-million-ton coal production base has gone into operation in the Shenfu-Dongsheng coalfield, said the Economic Daily on Friday.
The coal base, located along the boundary between Shaanxi Province and the Inner Mongolia Autonomous Region, both in north China, was developed by the Shendong Power Co. Ltd., a subsidiary of the country's largest coal producer - the Shenhua Group.
By December 23, the Shendong company announced its annual coal output in 2005 has exceeded one million tons.
Shendong's output now makes up about 5 percent of the national total. In 2004, the Shenhua Group ranked the fifth worldwide in term of coal production.
According to China's future strategy for coal industry, China plans to build three to five large-scale coal bases each with an annual output exceeding one million tons.

Iron Ore Deposits Found on Qinghai-Tibet Plateau

China's newest geographic survey on the Qinghai-Tibet Plateau, dubbed as the Roof of the World, has led to finding of three large iron-rich ore deposits, a senior survey official said in Chengdu, southwest China’s Sichuan Province, on Saturday.
"Each of the three deposits boasts a potential reserve of more than 50 million tons, with that of the largest exceeding 100 million tons," said Zhang Hongtao, deputy director of the China Geological Survey Bureau.
China produced 29 percent of world steel in 2004, but 90 percent of the iron ore it needs has to be imported due to short of resources, which forced the country to accept a 71.5-percent rise in the iron ore price this spring.
The newly found iron ore deposits are expected to help ease domestic supply and boost the development of China's vast west region.
Zhang disclosed at a meeting on their survey results that the Qinghai-Tibet Plateau is also rich in oil resources, with potential reserve estimated at more than 10 billion tons.
Widely recognized as the world's third pole, the Qinghai-Tibet Plateau covers an area of 1.52 million square kilometers, almost one sixth of China's territory.
The geochemical survey of the vast plateau filled the last blank in the medium scale geochemistry map of the country's land. Some 1,000 geologists from 24 organizations and institutions have been working on the often snow-capped plateau for the past seven years on the survey project, which was completed in September.

China to raise natural gas prices

The government has decided to phase out its current practice of pricing natural gas, with an aim to form a market-oriented price mechanism in the sector.
Pressured by top oil and gas producers PetroChina and Sinopec, the National Development and Reform Commission yesterday also decided to increase natural gas prices by an average of 5-15 per cent - the biggest price adjustment since 1997 to make up for their production costs.
Starting next year, natural gas prices will be modified once every year, a spokesman said.
He admitted that the reform of the natural gas price has lagged behind price reforms for oil, liquefied natural gas, coal and electricity, which are more market-oriented with government supervision.
"In the long run, natural gas prices should also be decided by the market, not the government," said the spokesman. But he added that the government should introduce the reform gradually because State-owned PetroChina and Sinopec still dominate gas exploration, gas transportation and sales on the Chinese mainland.
The commission said that prices of gas used for industrial or urban utility would rise by 0.05 to 0.15 yuan (0.6-1.8 US cents) per cubic metre, while the price of gas used for fertilizer production would rise 0.05 to 0.10 yuan (0.6-1.2 US cents). The price increases were put into effect yesterday.
The spokesman ruled out the possibility of a large increase in urban family utility bills. A household that uses an average of 20 cubic metres of gas per month will pay only 3 yuan (37 US cents) more after the price lift, he said.
Since 1978 when China began its reform and opening-up drive, the government has begun decentralizing its pricing controls on commodities.
Currently, market-oriented price mechanisms exist in more than 90 per cent of commodities and services. However, the remaining 10 per cent of commodities that are essential for daily life and of national interest are priced under government guidance.
Natural gas is the only major commodity on the Chinese mainland that has its prices still partially controlled by the government.
PetroChina said last month that it plans to more than double its current gas production to 45 billion cubic metres by 2010, or 70 per cent of the country's total gas output.
The company has complained that government-set prices for natural gas have been discouraging investment in gas fields.
"The price hike is designed to encourage them to invest in natural gas exploration," said the government spokesman.
The production of natural gas is expected to rise by an average annual rate of 17 per cent between 2005 to 2010, while the annual demand growth rate is expected to increase 26 per cent during the same period.

China shuts down 2,411 coal mines

China's safety supervisor said on Sunday in Beijing that by Dec. 19, altogether 2,411 coal mines had been closed down across the country due to safety problems.
The State Administration of Coal Mine Work Safety announced here on Sunday a namelist of the first batch of 1,044 closed coal mines.
Among these closed mines, 59 were in Beijing, 125 in Hebei Province, 386 in Inner Mongolia Autonomous Region, 70 in Jiangxi Province, 58 in Hubei Province, and 135 in Sichuan Province.
According to regulations on coal mine work safety promulgated by the State Council, the Chinese cabinet, coal mines which failed to get safety licenses within a certain duration must stop production for rectification. If they could not pass the safety check later, the mines should be shut down.
By Dec. 19, altogether 12,990 coal mines were ordered to stop production due to safety problems and 2,411 of them have been closed down, said sources with the administration.
In recent years, the Chinese government has adopted a series of regulations and measures to improve coal mine safety.
But the situation remains grave, as official statistics showed that from January to September this year, 4,228 people had been killed in 2,337 coal mine accidents.

Liaoning Province exported 46.3% more steel during the first 11 months

According to the statistics released by the customs of Liaoning Province, steel exported from Liaoning province during the first 11 months totaled 2.69 million tons, and export value reached $1.7 billion, having increased 46.3% and 63.3% from last year respectively.
Namely, the quantities of flat rolled galvanized or covered iron and non alloy steel products exported were 1.16 million tons (unfolded) and 440, 000 tons (folded), increasing 26.1% and 76% comparing with those of the same period in 2004. And the export value reached $716 million and $307 million, up 45.8% and 79.5% each. The quantities of bars exported accounted to 470,000 tons (iron and non alloy steel bars) and 110,000 tons (alloy steel bars), up 51.6% and 120% respectively. Meanwhile, the pipes and tubes exported amounted to 360,000 tons, up 89.5%, and the quantity of flat rolled stainless steel with a higher value-added was only 9,000 tons.
The quantities of steel exported from Liaoning Province to main destinations in January - November of 2005 were <>for South Korean: 960,000 tons (increased by 63.7% from that in the same period of 2004), <> for Japan: 330,000 tons (increased by 112% from that in 2004), <> for USA: 300,000 tons (decreased by 18% from that in 2004), <> for EU: 300,000 tons (increased by 21.9% from that in 2004) and <> for Australia: 170,000 tons (increased by 875% from that in 2004).

China, US to hold talks on steel trade

China and the United States are scheduled to hold talks on the steel trade next year, a senior US official said yesterday.
Franklin Lavin, the US under-secretary of commerce for international trade, said the talks will aim to head off potential trade disputes in the sector.
The planned meeting shows that the steel issue has become of great concern to both countries, analysts said.
The talks will be held by the Joint Commission on Commerce and Trade, a dialogue mechanism set up by the two countries.
Annual commission sessions cover hot topics between China and the United States, such as energy, telecommunications and textile issues.
"We've had a number of steel issues that have come up and so wouldn't it be better if we looked at these issues in a broader economic context and not simply wait 'till we've got to a trade dispute?" Lavin told media.
Many Chinese steel products, in particular low-cost products, are facing growing calls for trade barriers.
In August, the US launched a probe into two classes of China-made steel pipes.
More than 50 Chinese enterprises are involved, including 20 with an annual export volume of over US$1 million.
Lavin said formal trade disputes were not the best way to solve such problems.
Instead, he suggested bilateral negotiations, similar to those conducted over the textile trade.
It took the two sides nearly a year and eights rounds of formal talks to settle that dispute, which began over US concerns about skyrocketing imports of textiles and garments from China.
This occurred after the removal of the global quota regime in the textile trade at the beginning of this year.
The two sides agreed to impose quantity restrictions on Chinese textile exports for the next three years.
Lavin said he had put forward the idea of creating a mechanism for discussing steel when he met Chinese officials earlier this week. China has not yet commented.
The US also has similar steel dialogue with other trade partners, such as Canada.
Meanwhile, Lavin hopes China will increase its imports from the US in order to reduce the US trade deficit with the country.
The deficit hit US$100 billion in the first 11 months of this year, according to statistics from Chinese customs.

China to Push on Energy Saving in Steel and Non-ferrous Metal Industries

According to a temporary regulation on advancing industry structure adjustment, China will lay stress on boosting energy saving in the industries such as steel, non-ferrous metal, power, petrochemical, building, coal, construction material and paper.
The regulation calls for producing and using various energy saving consumable goods, developing environmental friendly industry in a bid to checking unreasonable activities in resource exploitation and intensifying ecosystem protection for water, land, forest, plain and sea.

Year-end review of world oil prices in 2005

The crude oil prices in 2005, after the robust jumps in 2004, have continued to reach fresh highs one after another and entered a period of adjustment at the year-end.
The irrational curves have run out of the predictions of some experts, leaving the whole world worried. Although attending parties reached an agreement at the ministerial meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Kuwait on Dec. 12 on keeping a petroleum production, the vicissitudes on the world oil market have never been easily predictable.
At the beginning of this year, oil prices, continued to climb step-by-step following last year.
On Jan. 3, the first trading day of New York Mercantile Exchange, the prices of crude oil futures closed at US$42.12 per barrel, which later soared to US$49.50 on Jan. 18. On Feb. 22, they rose again to US$51.15, soaring amid fluctuations. In mid-March, they hit US$55, then 57.27 in early April and finally topped US$60 for the first time on May 27. Days later, though falling back sometimes, the prices still lingered on a high level of US$70.
In order to bring down the oil prices on the world market, the International Energy Agency (IEA) decided to input 60 million tons of crude oil into theUnited States, whose government also announced to release 30 million tons fro its strategic petroleum reserve. As a result, the crude oil futures price in New York plunged to US$64.37 on Sept. 7. What followed was a non-stop downslide, finally to below US$60 per barrel on Oct. 31. On Nov. 17, it fell further to a five-month low of US$56.33 but bounced back to US$60.66 on Dec. 6.
In retrospection of the ups and downs on the world petroleum market this year, the severe fluctuations of oil prices were the result of both geo-political crisis, or political risk premium, the demand and supply as well as emergency incidents, assisted by outside interference and speculation.
Over the year, despite a remarkable fall in the last quarter, the oil prices this year has grown by as much as 50 percent from the about US$40 per barrel last year. Oil price soaring crazily is by no means good news for the world economy to grow steadily.
Oil price is the "forecast" for the global economy as the latter is directly affected by it changes.
The International Monetary Fund (IMF) holds that the world economy will be slowed down by 0.3 percentage points with every rise of five cents per barrel. According to calculations by the European Union (EU) commission, if the oil price grows by US$10 cents, the economic growth in the euro zone will be dragged down by 0.75 percentage point in two years with the inflation rate up 0.6 percentage point.
Considering oil price, the World Bank has lowered its forecast for world economic growth from last year's four percent to 3.2 percent this year. In addition, oil price hikes have also had its impact on global trade. According to predictions by the (WTO), the global trade volume will grow by around 6.5 percent this year, which is far lower than last year's nine percent. If it were not for the ever-stronger capabilities of various economies in adjustment and resistance, the negative impact would have been expanded to an unacceptable scale.
The world oil market will see both high and low ebbs next year.
As experts are concerned, from the perspective of demand, slower growth of the world economy will reduce global demand for petroleum therefore will not help push the price climb. From the perspective of supply, there is hardly any possibility for the global production capability and output to have a remarkable growth, and the "bottleneck" of refinery capability cannot be solved promptly. This leaves very limited room for the oil price to fall back.
According to the prediction by related international institutions, the crude oil prices in 2006 will remain at a high level around US$65 per barrel. Of course, any link going wrong, the world oil prices will suffer a heavy shake, then the orientation of the world oil price will be hardly predictable.

Four Items of Ferrous metallurgy Industry Criterion to Take Effect as of June 1st 2006

China’s National Development and Reform Commission recently issued 93 items of industry criterion including four ones for ferrous metallurgy, which can be seen at the table below:

Nation plans to control steel production

China will limit annual steel production capacity to not more than 400 million tons during its 11th five-year plan which starts next year, according to the National Development and Reform Commission.
In a drive to curb surging investments that cause excessive supply of steel, the country plans to phase out 100 million tons of iron production capacity and 55 million tons of steel-making capacity by 2010, the top economic planning body said in a statement.
The steel output capacity in China last year jumped 35 percent to 419 million tons, while another 119 million tons of capacity are planned or under construction.
The surging capacity has caused prices to ride like a roller coaster in China this year.
In the domestic market, steel prices have been falling since April after hitting a decade-high, thanks to increasing overcapacity and inventories led by soaring investments and imports. The prices slumped sharply in late September, with those of widely used hotrolled steel sheets diving some 50 percent from March's level.
The Chinese government has been trying to curb expansion in the industry after steel output doubled in four years, which led to record high prices for iron, which surged 71.5 percent this year.
A policy the central government adopted in July encourages more industry mergers and aims to have the top 10 domestic mills account for more than 50 percent of the country's total output by 2010 and 70 percent by 2020.
"Steel demand in the country next year will grow at a limited pace as government measures are set to take effect," said Wu Xichun, former chairman of the China Iron and Steel Association.