The Chinese steel industry

We’ve seen the role that China plays in the world economy. Over the past two decades, China has become a key commodities consumer. Let’s analyze China’s role in the global steel industry.

China consumes half of the steel produced globally

The chart above shows the steel consumption in key economies. As you can see, China is the biggest consumer of steel globally, consuming almost half of the global production.

While a lot of this consumption is attributed to China’s huge population, the per capita consumption also has been increasing. Today, the per capita steel consumption in China is more than double the global average and almost 50% more than the per capita consumption in the U.S.

Chinese consumption has grown multifold

Over the past couple of decades, China has increased its steel consumption multifold. It’s overtaken the U.S. and Japan to become the biggest consumer globally. This was led by two factors—the slow growth witnessed in other countries and the growth in Chinese consumption.

We can divide the Chinese steel market into two main periods. The first period is from 1991–2000 when China started investing in its infrastructure. Consumption grew at a rate of 8% over this period.

The second and most important period came between 2000 and 2009 when Chinese consumption grew by a CAGR (or compound annual growth rate) of 17%. This led to the so-called super cycle in the metal industry. Companies like ArcelorMittal (MT), United States Steel (X), AK Steel (AKS), Nucor (NUE), and Steel Dynamics (STLD) reaped the benefits. Please be aware that the SPDR S&P Metals and Mining ETF (XME) seeks to invest in these companies.

In the next part, we’ll analyze the factors that made China the biggest steel consumer, which will be followed by the current scenario in the Chinese economy.

金属板材展-线材展-金属加工展-2015第十六届广州国际金属板材、棒材、线材及金属加工、配套设备展—全球三大金属展之一巨浪展览-THE 16th GUANGZHOU INTERNATIONALPLATEMETAL, BAR, WIRE, METAL PROCESSING & SETTING EQUIPMENT EXHIBITION