Steel Production and Stainless Steel Production in 2002 in China
China is one of the world’s largest producers of steel and stainless steel, and in 2002 the country produced more than 430 million metric tons of steel. This accounted for more than 40 percent of the world’s total steel production, making China the world’s leader in steel production. In 2002, China’s stainless steel production reached 4.22 million metric tons, the highest quantity of stainless steel produced in the country until that date.
Oil and gas demand, infrastructure construction and the generation of electricity have been the major factors influencing China’s steel production. In 2002, China’s steel industry continued to grow rapidly as a result of a booming domestic economy. China’s GDP grew by 8.3 percent in 2002, and growth in the steel sector was even greater. Steel production increased 9.4 percent in 2002, and stainless steel production registered even higher growth.
In 2002, the amount of steel produced in China was the highest ever recorded in the country. The growth was, however, largely attributed to increased domestic demand and not foreign exports. During 2002 China released 2.3 million metric tons of crude steel and 4.22 million metric tons of stainless steel, representing 19 percent and 9.6 percent growth in crude steel and stainless steel, respectively. In comparison to the previous year, crude steel output in 2002 rose by almost 20% to total 430.59 million metric tons. Despite the fast increase in production, China’s steel industry still operated at less than 70 percent of its installed capacity, with much of the excess capacity held in reserve.
China’s rising demand and fast growing steel industry has resulted in a dramatic surge in prices. During 2002, the global economy was still dealing with the aftershocks of the 2001 financial crisis and steel prices rose around the world. During 2002, steel prices in China soared by 59.1%.
On the consumption side, the demand for steel in 2002 was predominantly driven by the country’s rapidly growing economy. China’s infrastructure, including roads, railways and housing sectors, all increased consumption of steel in 2002. This high demand has enabled Chinese producers to increase their export of steel products to international markets, which resulted in higher prices in 2002.
China’s stainless steel production also increased significantly in 2002. Chinese stainless steel mills produced 4.22 million metric tons of stainless steel, up 9.6 percent from the previous year. This was the highest level of stainless steel production in China until that date. Much of the increase in production was due to investments made by Chinese producers in 2001, and to consolidation and restructuring of older mills.
As a result of increasing production, the Chinese production and export of stainless steel products continued to rise in 2002. Rising demand in the overseas markets, coupled with the rising cost of domestic production, prompted Chinese producers to export increased amounts of stainless steel.
Overall, China’s steel production and stainless steel production in 2002 was the highest seen in the country until that date, and the growth was driven largely by domestic demand. China’s rapid economic growth was the primary driver of steel production, and the Chinese producers were able to take advantage of higher prices and export more stainless steel products to international markets. Despite the high levels of production, China still had excess capacity and lower than optimum utilisation rates.
