CICC：China’s Steel Consumption on Real Estate, Infrastructure and Machinery to Maintain Growth in 2012 and 2013

According to CICC’s（China International Capital Corp.）latest analysis and outlook for China’s steel demand in 2012 and 2013, it predicts the demand will continue to grow but the speed of growth will slow down. The annual steel consumption is expected to increase 5.7% in 2012 and 3.7% in 2013 .

Based on CICC’s analysis of China’s steel consumption in eight sectors, the demand of real estate, infrastructure and machinery industries will continue to grow, mainly from demand-led investments in livelihood projects, water conservancy, environment and public facilities. The above three sectors account for nearly 70% of steel consumption (except for transportation and electricity), driving the speed of the overall consumption growth to increase about 3.9% in 2012 and 2.6% in 2013 respectively. Due to the early rapid growth, combined with being affected by the policy of sales restrictions, China's auto, home appliance and shipbuilding industries display weaker growth, relatively limiting the steel demand.

In addition, the investments in railway and power sectors fall, resulting in that steel demand decreases. Affected by the dual pressures of financing and operational safety issues, China’s railway investment shows a continuous decline, highway investment grows slowly, and the actual investment in transport industry drops, which make the use of steel fall. Constrained by the price mechanism, the growth of power investment slows down and the demand for steel almost doesn’t increase.