Chinese consumption surges

World trade in steel expanded sharply in 2004, influenced in large part by growth in the Chinese construction and manufacturing sectors, according to Vital Signs 2005, a recent

report.

Global production of crude steel increased 8.8% in 2004, the first year in which steel output passed the billion-ton threshold.

Steel consumption closely shadows economic growth in general, and China’s hot economy is expected to make it the driver in global use in the near term. Steel consumption in China is expected to increase by more than 10% in 2005, and this one nation is projected to account for 61% of total growth this year. By comparison, growth in the rest of the world is expected to be just over 2%.

China’s appetite for steel is affecting economies elsewhere. In November 2004, the Nissan Motor Company had to close three assembly plants in Japan for five days because of a lack of steel. And a fire that shut down a mine in West Virginia that supplies coke, a coal that fuels blast furnaces, led to production cutbacks at US Steel because other supplies were unavailable in the tight coke market.

The most widespread impact of Chinese steel consumption is in the price of steel and its inputs, which jumped by 50–70% in the last half of 2003 to near-record levels.

The price of steel scrap, around $100 per ton in the 1999-2002 period, surged past $250 in 2003 as China increased its imports.