China may reduce steel production in 2015 - CISA

According to the latest forecast from the China Iron and Steel Association (CISA), China's annual steel production in 2015 may decline for the first time in three decades. According to CISA analysis, crude steel production in the country is likely to decline slightly by 1.07 percent from the previous year, to around 814 million tonnes in 2015.

The slowdown in the Chinese economy is negatively affecting the country's real estate sector. Weak demand from the construction sector will reduce domestic crude steel production in 2015. According to statistics released by the National Bureau of Statistics (NBS), China's steel production grew by only 0.9 percent in 2014, while growth reached 7.5 percent in 2013.

The CISA report states that all major steel product categories experienced huge price reductions during 2014, including prices for rebar, widely used in the construction sector, which saw consumption down 12.9 percent from the previous year. The lack of demand from the automotive industry led to a 6.78 percent drop in domestic demand for galvanized sheets. Steel mills face difficulties with the Chinese authorities' implementation of the environmental protection law.

A drop in Chinese crude steel production will reduce demand for iron ore. This, in turn, will affect the profitability of the global iron ore giants, which are heavily dependent on Chinese ore demand. CISA predicts that the country's iron ore imports could reach 1.0 billion tonnes in 2015, an increase of 7.1 percent over the previous year. China imported 932 million tonnes of iron ore throughout 2013, an increase of 13.8 percent over 2012.