Steel industry in China

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The steel industry in China has been driven by rapid modernisation of its economy, construction, infrastructure and manufacturing industries. [1]

Contents

History

20th century

The steel industry was small and sparsely populated at the start of the twentieth century and during both world wars. Most of the steel infrastructure was destroyed during the wars, and were using Soviet technologies. China lagged behind the western countries in its steel industry development even though they were using central planning techniques during the early days of communist rule. [2]

China underwent rapid economic industrialisation since Deng Xiaoping's capitalist reforms which took place four decades ago in 1978. [3]

Deng Xiaoping Chinese politician, Paramount leader of China

Deng Xiaoping was a Chinese politician who was the paramount leader of the People's Republic of China from 1978 until his retirement in 1992. After Chairman Mao Zedong's death in 1976, Deng led China through far-reaching market-economy reforms and has been called the "Architect of Modern China."

The steel industry gradually increased its output. China's annual crude steel output was 100 million tons in 1996. [4]

21st century

China produced 123 million tonnes (121,000,000 long tons; 136,000,000 short tons) of steel in 1999. After its ascension to the WTO it aggressively expanded its production for its growing appetite of manufacturing industries such as automotive vehicles, consumer electronics and building materials. [3]

World Trade Organization Intergovernmental trade organization

The World Trade Organization (WTO) is an intergovernmental organization that is concerned with the regulation of international trade between nations. The WTO officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 123 nations on 15 April 1994, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. It is the largest international economic organization in the world.

Automotive industry in China aspect of history

The automotive industry in China has been the largest in the world measured by automobile unit production since 2008. Since 2009, annual production of automobiles in China exceeds that of the European Union or that of the United States and Japan combined.

Consumer electronics Electronic products for everyday use

Consumer electronics or home electronics are electronic equipments intended for everyday use, typically in private homes. Consumer electronics include devices used for entertainment, communications, and home-office activities. In British English, they are often called brown goods by producers and sellers, to distinguish them from "white goods" which are meant for housekeeping tasks, such as washing machines and refrigerators, although nowadays, these would be considered brown goods, some of these being connected to the Internet. In the 2010s, this distinction is not always present in large big box consumer electronics stores, which sell both entertainment, communication, and home office devices and kitchen appliances such as refrigerators.

The Chinese steel industry is dominated by a number of large state-owned groups which are owned via shareholdings by local authorities, provincial governments and even the central authorities. According to China Iron and Steel Association, The top 5 steel groups by production volume in 2015 are Baosteel GroupWuhan Iron and Steel Corporation, Hesteel Group, Shagang Group, Ansteel Group and Shougang Group. [5]

China Iron and Steel Association is a national, non-profit organization founded in 1999 on the basis of China Metallurgical Enterprise Management Association. CISA members consist of China’s steel enterprises, institutions, societies and individuals in the iron and steel industry, which participate the organization voluntarily according to certain regulations. CISA now has over 119 group members. CISA is made up of 7 administrative bodies with 30 staff and 7 working committees.

Wuhan Iron and Steel Corporation company

Wuhan Iron and Steel Corporation (WISCO) is a Chinese state-owned enterprise. It started to operate in 1958 in Qingshan, Wuhan, Hubei, China.

Hesteel Group company

Hesteel Group Company Limited is a Chinese iron and steel manufacturing conglomerate, also known as Hesteel Group or its pinyin shortname Hegang. The company was also known as Hebei Iron and Steel Group Co., Ltd. or HBIS until 2016.

By 2008 raw materials such as Iron ore prices grew and China had to reluctantly agree to price increases by the three largest iron ore producers in the world; BHP Billiton, Rio Tinto and Vale. [3] During the Global financial crisis the Chinese steel mills won price reprieves as demand from their customers slowed. When the demand started to pick up again in 2009 and in 2010, the price crept back up due to higher demand for automobiles, low interest rates, government fiscal stimuli around the world. [6] Prices for iron ore were negotiated on an annual contract pricing scheme. [7] [8] [9] [10] Australian iron ore producers were not happy that iron prices did not reflect Spot market pricing. In 2010 pressure from BHP Billiton and Rio Tinto to move to a quarterly based index pricing succeeded. [11] Many Japanese steel mills and Chinese steel companies had to follow as demand for raw materials heated up. [11] [12] [13] Spot-basis pricing has caused problems for steel manufacturers such as exposing them to price fluctuation in the market and reducing the stability of resource supply. Steel mills prefer long term pricing to hedge against cost and maintain raw material supply stability. [14] Rio Tinto has said it will cancel contracts and sell the steel on the spot markets if Chinese steel mills back down on the new quarterly pricing regime. [14]

In 2011 China was the largest producer of steel in the world producing 45% of the world's steel, 683 million tons, an increase of 9% from 2010. 6 of 10 of largest steel producers in the world are in China. Profits are low despite continued high demand due to high debt and overproduction of high end products produced with the equipment financed by the high debt. The central government is aware of this problem but there is no easy way to resolve it as local governments strongly support local steel production. Meanwhile, each firm aggressively increases production. [15] Iron ore production kept pace with steel production in the early 1990s but was soon outpaced by imported iron ore and other metals in the early 2000s. Steel production, an estimated 140 million tons in 2000 increased to 419 million tons in 2006. Much of the country's steel output comes from a large number of small-scale producing centers, one of the largest being Anshan in Liaoning.

China was the top exporter of steel in the world in 2008. Export volumes in 2008 were 59.23 million tons, a 5.5% fall over the previous year. [16] The decline ended China's decade-old steel export growth. As of 2012 steel exports faced widespread anti-dumping taxes and had not returned to pre-2008 levels. Domestic demand remained strong, particularly in the developing west where steel production in Xinjiang was expanding. [15]

On 26 April 2012 a warning was issued by China's bank regulator to use caution with respect to lending money to steel companies who, as profits from the manufacture and sale of steel have fallen, have sometimes used borrowed money for speculative purposes. According to the China Iron and Steel Association the Chinese steel industry lost 1 billion Rmb in the first quarter of 2012, its first loss since 2000. [17]

As of 2015 the global steel market was weak with both Ukraine and Russia attempting to export large amounts of steel. [18] Weak domestic demand in 2014 resulted in record exports of 100 million metric tons of steel by the Chinese steel industry. [19]

Efforts by the Chinese Ministry of Environmental Protection under the Action Plan for the Prevention and Control of Air Pollution has resulted in pressure on steel mills in Linyi and Chengde to employ environmental protection measures on pain of being closed down. [20]

In the context of lowered demand (see also 2015–16 Chinese stock market crash), in 2016 the Chinese state announced large scale closures and redundancies in heavy and primary industries, many of which were functioning as zombie companies, with 1.8 million redundancies (15% of workforce) in the coal and steel industries planned to take place by 2020. [21]

See also

Related Research Articles

Iron ore ore rich in iron or the element Fe

Iron ores are rocks and minerals from which metallic iron can be economically extracted. The ores are usually rich in iron oxides and vary in colour from dark grey, bright yellow, or deep purple to rusty red. The iron is usually found in the form of magnetite (Fe
3
O
4
, 72.4% Fe), hematite (Fe
2
O
3
, 69.9% Fe), goethite (FeO(OH), 62.9% Fe), limonite (FeO(OH)·n(H2O), 55% Fe) or siderite (FeCO3, 48.2% Fe).

BHP Anglo-Australian multinational mining and petroleum company

BHP, formerly known as BHP Billiton, is the trading entity of BHP Group Limited and BHP Group plc, an Anglo-Australian multinational mining, metals and petroleum dual-listed public company headquartered in Melbourne, Victoria, Australia.

Rio Tinto (corporation) Anglo-Australian multinational mining company

Rio Tinto is an Anglo-Australian multinational and one of the world's largest metals and mining corporations. The company was founded in 1873, when a multinational consortium of investors purchased a mine complex on the Rio Tinto, in Huelva, Spain, from the Spanish government. Since then, the company has grown through a long series of mergers and acquisitions to place itself among the world leaders in the production of many commodities, including aluminium, iron ore, copper, uranium, and diamonds. Although primarily focused on extraction of minerals, Rio Tinto also has significant operations in refining, particularly for refining bauxite and iron ore. The company has operations on six continents, but is mainly concentrated in Australia and Canada, and owns its mining operations through a complex web of wholly and partly owned subsidiaries. Rio Tinto has joint head offices in London and Melbourne.

Aluminum Corporation of China Limited, is a Chinese company listed in Hong Kong SAR and in New York. Multinational aluminium company headquartered in Beijing, People's Republic of China. It is the world's second-largest alumina producer and third-largest primary aluminium producer. Chinalco is principally engaged in the extraction of aluminium oxide, electrolyzation of virgin aluminium and the processing and production of aluminium as well as traded trading and engineering and technical services.

Mining in Iran

Mining in Iran is underdeveloped, yet the country is one of the most important mineral producers in the world, ranked among 15 major mineral-rich countries, holding some 68 types of minerals, 37 billion tonnes of proven reserves and more than 57 billion tonnes of potential reserves worth $770 billion in 2014. Mineral production contributes only 0.6 per cent to the country's GDP. Add other mining-related industries and this figure increases to just four per cent (2005). Many factors have contributed to this, namely lack of suitable infrastructure, legal barriers, exploration difficulties, and government control over all resources.

Fortescue Metals Group company

Fortescue Metals Group Ltd is an Australian iron ore company. Fortescue is the fourth largest iron ore producer in the world after BHP Billiton, Rio Tinto, and Vale. The company has holdings of more than 87,000 km2 in the Pilbara region of Western Australia, making it the largest tenement holder in the state, larger than both BHP Billiton and Rio Tinto.

The mineral industry of Mozambique plays a significant role in the world’s production of aluminium, beryllium, and tantalum. In 2006, Mozambique's share of the world's tantalum mine output amounted to 6%; beryllium, 5%; and aluminium, 2%. Other domestically significant mineral processing operations included cement and natural gas.

Goldsworthy railway

The Goldsworthy railway, owned and operated by BHP Billiton, is a private rail network in the Pilbara region of Western Australia built to carry iron ore. It is one of two railway lines the group operates in the Pilbara, the other being the Mount Newman railway.

The Rio Tinto espionage case began with the arrest on 5 July 2009, of four staff in the Shanghai office of the Rio Tinto Group, in the People's Republic of China, who were subsequently accused of bribery and espionage. Two days later, an import executive of the Shougang Group and Laigang Group was also arrested. The Rio Tinto employees, Australian Stern Hu and three Chinese colleagues, Wang Yong, Ge Minqiang and Liu Caikui, went on trial in Shanghai on Monday, 22 March 2010.

Channar mine mine

The Channar mine is an iron ore mine located in the Pilbara region of Western Australia, 17 kilometres south-east of Paraburdoo.

Eastern Range mine iron ore mine in Western Australia

The Eastern Range mine is an iron ore mine in the Pilbara region of Western Australia, 10 kilometres south-east of Paraburdoo.

Yandicoogina mine iron ore mine in Western Australia

The Yandicoogina mine, often shortened to Yandi, is an iron ore mine located in the Pilbara region of Western Australia, 95 kilometres north-west of Newman. it should not be confused with BHP Billiton's Yandi mine, which is located nearby.

Iron ore mining in Western Australia

Iron ore mining in Western Australia, in the 2016-17 financial year, accounted for 54 percent of the total value of the state's resource production, with a value of A$61.7 billion. The overall value of the minerals and petroleum industry in Western Australia was A$114.9 billion in 2017-18, a 9.5 percent increase on the previous financial year.

Jimblebar mine mine in Australia

The Jimblebar mine is an iron ore mine located in the Pilbara region of Western Australia, 41 kilometres east of Newman.

Pardoo mine mine in Australia

The Pardoo mine is an iron ore mine located in the Pilbara region of Western Australia, 75 kilometres east of Port Hedland.

Yarrie mine

The Yarrie mine is an iron ore mine located in the Pilbara region of Western Australia, 90 kilometres north-east of Marble Bar.

Yandi mine iron ore mine in Pilbara region of Western Australia

The Yandi mine is an iron ore mine located in the Pilbara region of Western Australia, 90 kilometres north-west of Newman. It should not be confused with Rio Tinto's nearby Yandicoogina mine, which is also sometimes shortened to Yandi.

Orebodies 18, 23 and 25 mine mine in Australia

The Orebodies 18, 23 and 25 mine is an iron ore mine located in the Pilbara region of Western Australia, 8 kilometres east of Newman. The mine is majority-owned and operated by BHP, and is one of seven iron ore mines the company operates in the Pilbara. The company also operates two port facilities at Port Hedland, Nelson Point and Finucane Island, and over 1,000 kilometres of rail in the Pilbara.

Port of Port Hedland Major Australian seaport

Port Hedland is one of the largest iron ore loading ports in the world and the largest in Australia. In 2011 it had the largest bulk cargo throughput in Australia. With the neighboring ports of Port Walcott and Dampier, Port Hedland is one of three major iron ore exporting ports in the Pilbara region of Western Australia,

The Simandou mine is a large iron mine located in the Simandou mountain range of southern Guinea's Nzérékoré Region. Simandou represents one of the largest iron ore reserves in Guinea and in the world, having estimated reserves of 2.4 billion tonnes of ore grading 65% iron metal.

References

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