Basic views on current steel and plate market

Basic views on current steel and

plate market

Wu Wenzhang , Steelhome

May 28, 2014

结束

1. Rapid development of steel industry is inevitable with the stable and rapid growth of national economy.

As an important base for national economy and supporting industry for modernization and urbanization,

Steel industry is technology, capital, resource and energy intensive. The steel industry has developed remarkably since 2001

mainly thanks to the pattern of economic growth oriented at fixed assets investment and offered strong support for rapid and

sustainable of national economy.

2. Large-scale investment in steel industry started in 2003, introducing great amount of internationally advanced

technology and equipment of middle-and-late 1990s’.As a result, the quality and output of steel products with self-owned IPR

can meet the demand for the growth of national economy, and steel industry becomes one of the few in China with global

competitive advantages.

4. The rapid development of steel industry in China promotes the overall development of global steel industry, including

the balance between supply and demand market of steel, raw materials and fuel, construction of and investment in mines

(iron, coal and so on), manufacturing of equipment, technical progress and D& R of new products.

3 . At present, the technical and economic index of major steel enterprises have reached or exceeded internationally

advanced level. The major medium and large-scale steel enterprises recycle the wastes and waste heat generated at each

stage. Cyclic economy and garden plant has changed the traditional opinion on steel manufactures. But there are still some

new small steel manufacturers who do not pay due attention to energy and environment issues. High energy consumption

and large emissions is common.

Predominant views on the 10th Steel Industry Development Strategy Conference

up to 723.88 million tons

Rapid development from 2001 to 2012

？

Comprehensive overcapacity

From 2012--? Output up to 0.8 or

0.85 billion tons or more?

Transition stage 1981-2000

rise to 128500kt

Inevitable rapid development of steel industry with stable

and rapid growth of national economy

Review of development of steel industry

Data source: Steelhome Data Center

Early stage1949-1980

Output from 158 kt to 37120kt

Four stages

1 Early :1949-1980

2 Transition: 1981-2000

3. Fast development: 2001-2012

Three turning points

1: rapid growth in 2001

2: balance in total amount in2005

3; over-capacity in 2012

4 Overall excessive development：2012－？ 4: 20？？Steel production begins to drop？

Inevitable rapid development of steel industry with stable and

rapid growth of national economy

Compared with 2000, GDP in 2013 increased by 4.7 times, fixed assets investment by 12.6 times, total retail sales of consumer

good by 5.1 times, Foreign trade export by 5.6 times, crude steel by 5.1 times , and apparent consumptions by 4.1 times.


China’s GDP from 1949 to 2013 100 million Yuan

100 million Yuan

100 million Yuan

100 million Yuan

Total social fixed assets investment (1980-2013)

Total retail sales of social consumer goods (1962-2013) Foreign trade export value from 1950 to 2013 (in 100 million Yuan)

A.C 143.33 million

rise by 6.85times

Length of railways in operation 103,200km

rise by 0.5times

Mileage of expressway 104500 km

rise by5.14times

Floor space of buildings 1014.35 million m2

rise by3.04time

Deepwater berths 1932

rise by2.37times

mileage of urban rail transit 2539 km

rise by16.39times

Mileage of pipelined oil(gas) 10.6000km

rise by3.29 times

Civil airports 193

rise by 0.4times Container 2.70 mil.

rise by 0.68 times

Shipbuilding deadweight tonnage of 61.47mt

rise by 16.75times

medium and large tractors 580000

rise by 12.16 times

vehicle 23.87 million

rise by 10.53times

metal-cutting machinery 720000

rise by 3.09times

Washing machine fridge 93.41million

72.02 million rise by 6.3 times

growth in 2013 compared to 2000

crude steel: 5.1 times(apparent consumption 4.1 times) iron:4.4times

steel:7.1times GDP: 4.7times Investment:12.6times

Consumption:5.1times Export:5.6times

Inevitable rapid development of steel industry with

stable and rapid growth of national economy

Rapid growth under constant macro-control of the State

Constant macro-control over steel industry since this century


April 2014 Clean production standards for steel and cement industries jointly published by three ministries

Oct. 2013 Guiding Opinion on Resolving the Conflict Caused by Severe Over-capacity issued by the State Council

2013 Provisional tarrifs on coke export eliminated, automatic registration system of iron ore import licensing implemented

Sept. 2012 Standard conditions of the iron and steel industry (2012 revision) issued by MIIT. April and Dec. 2013 Two lists of

qualified enterprises proclaimed respectively

April 2012 Limited credit policy for steel trade industry implemented by the Central Bank

June 2010 Several opinions of the General Office of the State Council on further promotion of energy-saving and emission-

reduction and acceleration of restructure of steel industry

March 2009 Restructuring and revitalization plan of steel industry issued by the State Council

Nov. 2008 Economic stimulus of 4 thousand billion yuan to fight against international economic crisis

June 2006 Circular on controlling total output, washing out the backward and speeding up restructuring of steel industry jointly

published by eight ministries 2005-2010 Policy on export tax rebates of steel products adjusted. Preferential tarrif policy for “substitution of home-made steel

for similar imported ones” terminated and export tax rebate of general steel eliminated step by step; Provisional tarrfis on billet,

coke and general long steel imposed, Import qualification control of iron ore.

April 2005 Tieben incident July 2005 Policy for iron and steel industry development issued by SDRC

May 2004 Risk pre-warning to overheated steel, cement and electrolytic aluminium industries by the Central Bank

Nov. 2003 Several opinions on curbing irrational investment in steel industry jointly published by five ministries

Jan. 4, 1999 Circular on controlling total output of steel industry issued by SETC.

April 2013 Steehome Steel industry development strategy conference, Troubles started from inside and spread to outside.

It is a long way to go for structure adjustment.

April 2012 Steelhome Steel industry development strategy conference: Steel industry in China steps in comprehensive over-

capacity stage.

June 2010 WSD conference U.S.A : Steel demand in China will enter a peak range of 700-750 million tons during 2012-2015.

April 2009 Steelhome Steel industry development strategy conference: Listing of steel futures will challenge current pricing mechanism .

June 2008

Dec .2006

WSD Conference, U.S.A

MB Meeting, Holland

Steel demand in China will enter a peak range of 650-700 million tons in 2015.

steel industry in China promotes the comprehensive development of global steel enterprises.

April 2006 Steelhome conference on world steel focusing on China Overemphasis on overcapacity is protection of backward.

Oct. 2005 China metallurgical News Deal with domestic supply-demand relationship from the point of global resource balance

Nov. 2001

Oct. 2001

Address from Li Jianshe, Manager of Masteel: Output of crude steel in 2005 will reach 300 million tons.

Sum-up meeting of total output of steel held by SETC: undeniable contribution, endless trouble!


Inevitable rapid development of steel industry with the stable

and rapid growth of national economy

Predominant views of Steel home for recent years

Problems confronted by steel industry in comprehensive over-capacity stage:

1. As the steel consumption enters peak area, the adjustment of economic structure and change of development

direction determines that the steel demand will drop in the future. Steel export will be under double pressure from extra

export tariffs and foreign anti-dumping measures. The conflict caused by over-capacity of steel can not be solved effectively

in short term.

4. The enterprises involved in steel trade and circulation are small and scattered. About one third have withdrawn or

are stepping out of the industry due to changed irrational investment and limited credit. Another one third have shrunk to a

large extent, switching from core to sideline business. While the steel trade and circulation is centralized in large enterprises,

large downstream users prefer to purchase straight from steel manufacturers. The shortened circulation effects directly scale

production and orders planning, leading to higher selling expense.

2. Steel industry is capital intensive. It is now featured by “high leverage, high taxed, high financial expenses and

low profits”, sluggish market demand and low price.

3. At present the concentration of steel industry in China is low with unreasonable distribution and low level of

specialized production.

5. The mine, coal, coke and steel futures are listed, and index pricing for raw materials and fuels and network pricing

for steel are implemented. Currently “close to market, retroactive pricing ”strategy is very popular in steel manufacturers.


Steel industry—where to go？－－new platform·new path·new development

New platform: oriented by restructuring, bonded by capital, focused on financial management, by means of

acquisition and restructuring, extra-large steel manufacturing and circulating groups will be established to improve

concentration and set up information management and E-business platform, to direct modern enterprises to develop

towards scale, intensification and specialization.

New path: move along the quality and efficiency-oriented development path. Take account of four major factors,

i.e. cost, quality, market share and profits, structure adjustment, energy-saving and environment protection. Carry out

low-cost strategy and focus on procurement management.

New development:

1 It is a long process to relief over-capacity of steel. Given changed development pattern and adjusted industry

structure, make good use of governmental policies and measures for structure adjustment of steel industry , expand

and improve business as well as choose appropriate time to eliminate low-efficiency capacity.

2. Since the conditions for E-business for steel industry are ripe, take the opportunity of development brought up

by the age of data.

3. Take the advantage of hedging function of mine, coal, coke and steel futures in steel industry chain, pay

attention to risk management in material procurement and product sales, take precautions to prevent and avoid side

effects of market fluctuation on stable operation and economic benefits.


Demand: Economic growth is estimated to be about 7.5% in 2014, demand for crude steel about 750 million tons,

increased by 3%；steel export 66 million tons, increased by 5.9%. Import to be remained the same. Net export of crude

steel will be 55 million tons, increased by 7.9%. The growth of domestic demand for steel in 1st quarter keeps low, and it will

turn better in the 2nd quarter and second-half year.

Output: The output of crude steel and pig iron is estimated to be 800－810 million tons and 730 million tons in 2014, a

year-on-year rise of 3.3% and 3.4% respectively. The actual output of crude steel in the 1st quarter is lower than a year ago

and is expected to increase in the 2nd quarter and second-half year.

Cost: Domestic supply of iron ore is abundant in 2014. The raw iron ore is expected to reach about 1.5 billon tons,

increased by 3.4%. The import will rise by 50 million tons to 0.87 billion tons, increased by 6.2%. The output and supply

of domestic iron ore is determined by international market price. The import price of iron ore in 2014（62%）mainly lies

in the range of 110-140 $/t with an annual average of 120-125 $/t. Trade financing of iron ore is one of the biggest risks

for domestic steel market. The domestic demand and export of coke continues to grow. The price of coking coal, mainly

dependent upon the huge import from CIS and Mongolia, can hardly see a big rise although it is at the bottom now.

Capital: Domestic money supply is relatively sufficient and he growth of social financing amount drops on a year-

on-year basis. The capital for real economy keeps tense and is expected to improve later while the financial strain remains

for steel industry.

Conclusions: The steel market will have supply and demand in weak equilibrium in 2014 and keep at low price, low

efficiency and low inventory .The market price of steel will gradually rebound in the 2nd quarter and fluctuate in the 3rd and 4th

quarters with an average higher than that in 1st Q. The annual average price of hot-rolled steel is estimated to be approx.

3550 yuan/t, down by 5% or so compared to 2013.

Judgments of steel market for current and second-half year


Average of 2011：165 $/t



average of 2014：120-125 $/t Data source: Steelhome Data Center

The main running interval of import prices(CIF) of iron ore in 2014 is 110-140$/t with an average about 120-125$/t ，

decreased by 10% or so compared to 134$/t in 2013.

Price interval

Above 140$/t

Running time

2%

130-140 $/t

120-130 $/t

110-120 $/t

30%

35%

20%

100-110 $/t

Below 100$/t

10%

3%

Predominant views on the 10th Steelhome steel industry development strategy conference

Import prices of iron ore in China in 2014 and predictions on price range

Imported iron ore price movement by Steelhome (China) (Jan 1, 2011 to Dec 5, 2014) Source: www.steelhome.cn/data

Prediction on annually average price of general hot-rolled steel in 2014

The steel market will keep in weak equilibrium in 2014. The price is expected to rebound in the 2nd quarter. The overall

prices in the 3rd and 4th quarter will exceed that in the 1st quarter .The annually average price of general hot-rolled steel

is 3550 yuan/t, dropped by 5% or so compared to that of 2013.

rebar 4941 yuan/t in 2011

hot-rolled coil 4723 yuan/t in 2011

average of 2014 3550 yuan/t

rebar 4111 yuan/t in 2012

Hot-rolled coil 4043 yuan/t in 2012

hot-rolled coil 3741 yuan/t in 2013

rebar 3655 yuan/t


Predominant views on the 10th Steelhome steel industry development strategy conference

Average price movement by Steelhome (China) (Jan 1, 2011 to Dec 5, 2014) Source: www.steelhome.cn/data

Rebar 20HRB40 Hot rolled coil 5.5mm

Views on trend of domestic plate market

Basic views on domestic plate market this year

1. The growth of plate output and supply will slow down in 2014.

● The output and supply of steel are 112.15 million tons and 106.53 million tons in the 1st quarter, year-on-year

increased by 3% and 0.9% respectively, lower than those of long steel. Among which, the output and supply of hot-rolled

plate are 76.68 million and 73.93 million, a year-on-year increase of 0.1% and decrease of 1.3% respectively; those of

cold-rolled plate are 35. 48 million and 32.61 million, year-on-year increase of 10.1% and 6.4% respectively. Among

hot-rolled plate, the output and supply of coil are 44.09 million and 42.36 million, year-on-year decrease of 3.1% and 5.3%

respectively.

●In turn, the sluggish demand for steel forces the manufacturers to adjust the product mix. The reduced demand

for fixed assets investment curbs the launch of hot-rolled plate while the steady increase of cars and appliances supports

the release of cold-rolled plate.

●Although the growth of plate trends to slow down, it is still difficult to alleviate the overcapacity issue.

Data source: National Bureau of Statistics, General Customs Administration,Steelhome Data Center

Growth of steel output and supply to decelerate

Output, import & export and apparent consumption of crude and steel in Q1 of 2014

output

crude

pig iron

steel

import

steel

billet

crude

export

steel

billet

crude

net export

steel

billet

crude

Supply

crude

steel

Jan.-March

20270

17970

26141

Jan.-March

359

9.0

382

Jan.-March

1833

0

1950

Jan.-March

1474

-9

1568

Jan.-March

18702

24667

same period of last year

19795

17952

24825

Same period of last year

323

14.9

344


1443

0

1535


1120

-15

1191


18603

23705

+/-

475

18

1316

+/-

36

-6

38

inr.or dec.

390

415

+/-

354

6

377

+/-

98

962

growth rate%

2.4

0.1

5.3

growth rate%

11.3

-39.7

11.1

growth rate%

27.0

27.0

growth rate%

31.6

-39.7

31.6

Growth rate%

0.5

4.1

2013

77904

70897

106762

2013

1408

55

1553

2013

6234

0

6632

2013

4826

-55

5079

2013

72825

101936

2012

72445

66733

95877

2012

1362

36

1485

2012

5560

0

5916

2012

4198

-36

4430

2012

68015

91679

inc. or dec

5459

4164

10885

inc. or dec

46

19

68

inc. or dec

674

0

717

inc. or dec.

628

-19

649

inc. or dec.

4810

10257

growth rate %

7.5

6.2

11.4

growth rate %

3.3

53.0

4.6

growth rate %

12.1

-5.9

12.1

growth rate %

15.0

53.7

14.6

growth rate %

7.1

11.2

Data source: National Bureau of Statistics, Steelhome Data Center

Output

Long steel

Plate

Pipe

others

Import

long steel

Plate

Pipe

others

Export

long steel

plate

Pipe

others

Supply

long steel

Plate

Pipe

Others

Jan.-March

12105.3

11215.4

1871.0

949.3

Jan.-March

38.2

301.5

11.9

7.9

Jan.-March

663.5

863.6

201.8

103.8

Jan.-March

11480.0

10653.3

1681.1

853.4


11438.6

10885.8

1799.0

694.5


24.5

278.7

8.8

7.6


513.3

607.6

214.1

99.8


10949.8

10556.9

1593.7

602.3

inc./dec.

666.7

329.6

72.0

254.8

+/-.

13.7

22.8

3.1

0.3

+/-.

150.2

256.0

-12.3

4.0

+/-.

530.2

96.4

87.4

251.1

growth rate %

5.8

3.0

4.0

36.7

growth rate %

55.7

8.2

35.7

3.4

growth rate %

29.3

42.1

-5.7

4.0

growth rate %

4.8

0.9

5.5

41.7

2013

50548.9

45019.8

7979.0

2966.5

2013

141.4

1188.6

42.3

35.5

2013

2121.1

2764.1

900.5

448.1

2013

48569.2

43444.3

7120.8

2553.9

2012

44946.0

40883.9

7410.4

2452.3

2012

122.4

1157.3

42.1

40.3

2012

1507.1

2674.8

886.2

492.1

2012

43561.2

39366.5

6566.3

2000.5

+/-

5602.9

4135.9

568.6

514.2

+/-

19.0

31.3

0.1

-4.8

+/-

613.9

89.3

14.3

-43.9

+/-

5008.0

4077.9

554.5

553.4

growth rate %

12.5

10.1

7.7

21.0

growth rate %

15.5

2.7

0.3

-11.9

growth rate %

40.7

3.3

1.6

-8.9

growth rate%

11.5

10.4

8.4

27.7


Output and supply of domestic plate are lower than those of long steel

Note: Hot-rolled plate(HRP) is the combination of medium and thick plate, hot-rolled coil and hot-rolled narrow strip steel, Cold-rolled plate (CRP) is the combination of cold-rolled coil, galvanized strip, coated stripe, electrical steel strip and cold- rolled narrow strip. Data source: National Bureau of Statistics,Steelhome Data Center

Output HRP CRP Import HRP CRP Export HRP CRP Supply HRP CRP

Q1 7667.8 3547.6 Q1 105.2 196.3 Q1 380.32 483.27 Q1 7392.6 3260.6

Same period

of last year

7662.3 3223.5 Same period

of last year 86.2 192.5 Same period

of last year 255.17 352.41 Same period

of last year 7493.3 3063.6

+/-.

5.5 324.1 +/-. 19.0 3.8 +/-. 125.1 130.9 +/-. -100.7 197.1

Growth rate% 0.1 10.1 Growth rate% 22.0 2.0 Growth rate% 49.0 37.1 Growth rate% -1.3 6.4

2013 31077.5 13942.3 2013 377.8 810.8 2013 1103.9 1660.2 2013 30351.4 13092.9

2012 28450.8 12433.1 2012 350.5 806.8 2012 1082.1 1592.6 2012 27719.2 11647.3

+/- 2626.7 1509.2 +/- 27.3 4.0 +/- 21.8 67.5 +/- 2632.2 1445.6

Growth rate% 9.2 12.1 Growth rate% 7.8 0.5

Growth rate% 2.0 4.2 Growth rate% 9.5 12.4


Further optimization of structure of plate products


Output of crude and steel from 2001 to 2014

20000 0

120000 10000 t

100000

80000

60000

40000

5

0

35

30

25

20

15

10

Growth rate%

crude 15163 18237 22234 28291 35324 41915 48929 50306 57218 63723 68528 72388 77904 20270

steel 16068 19252 24108 31976 37771 46893 56561 60460 69405 80277 88620 95578 106762 26141

crude% 18.0 20.3 21.9 27.2 24.9 18.7 16.7 2.8 13.7 11.4 7.5 5.6 7.5 2.4

Steel % 22.2 19.8 25.2 32.6 18.1 24.2 20.6 6.9 14.8 15.7 10.4 7.9 11.4 5.3

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 14Q1

Import and export of steel from 2001 to 2014

1000 0

7000 6000

5000

4000

3000 2000

-2000

-3000

-4000

6000

5000

4000

3000

2000

1000

0

-1000

import 1722 2449 3717 2930 2582 1851 1687 1539 1764 1643 1563 1362 1408 359

export 474 545 696 1423 2052 4301 6265 5918 2458 4245 4897 5560 6234 1833

Net exp. -1248-1903-3021 -1507 -530 2450 4578 4380 694 2602 3334 4198 4826 1474

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 14Q1

Import and export of crude steel from 2001 to 2014

0

5000

4000

3000

2000

1000

6000

8000

7000

-6000

2000 0

-2000

-4000

6000 4000

import 2649 3066 4542 3503 2878 2006 1819 1661 2335 1811 1726 1485 1553 382

export 775 714 887 2120 2890 5480 7308 6425 2619 4530 5210 5916 6632 1950

Net exp. -1874-2352-3655 -1384 12 3473 5489 4763 284 2718 3484 4430 5079 1568

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 14Q1

Supply of crude steel from 2001 to 2014

0

80000 60000

40000

20000

120000 10000t

100000

0

20 15

10

5

30 25

Growth rate%

Crude 17038 20589 25889 29675 35312 38441 43440 45543 56934 61005 65045 67958 72825 18702

steel 17316 21155 27129 33483 38301 44443 51983 56081 68712 77675 84797 91120 101936 24667

crude% 22.3 20.8 25.7 14.6 19.0 8.9 13.0 4.8 25.0 7.1 6.6 4.5 7.1 0.5

steel% 22.6 22.2 28.2 23.4 14.4 16.0 17.0 7.9 22.5 13.0 11.8 6.9 11.2 4.1

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 14Q1


Output, import & export and supply of crude and steel

Note: long steel=medium and large section bar+rod+reinforcement+wire；plate=medium and thick plate+hot rolled coil+hot rolled narrow strip+cold-rolled narrow

strip+coated and galvanized strip+electrical steel strip

Data source: National Bureau of Statistics, General Customs administration, Steelhome Data Center

Output of long steeland plate during 2001-2014

40000

35000

30000

25000

20000

15000

10000

5000

0

45000

50000

25

20

15

10

5

0

-5

30

35

long steel plate

9127 10992 13269 15916 19061 22462 26617 26251 32368 35740 40282 44399 50549 12105

5193 6498 8017 10018 14314 19504 24251 26096 29878 36112 38918 40778 45020 11215

long steel% 22.5 19.4 19.6 20.0 19.0 19.6 17.4 -0.7 23.7 10.9 15.0 10.2 12.5 5.8

Plate % 13.8 19.1 23.9 29.7 32.1 31.6 30.1 6.4 14.4 18.9 8.6 3.9 10.1 3.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 14Q1

Import and export of long steel during 2001-2014

2000 1500

1000

500

2500

0

2000 1500

1000

500

2500

0

import

export 133 184 266 497 696 1375 2177 1618 365 711 925 1507 2121 664

net exp. 39 58 58 281 525 1229 2040 1491 241 556 777 1385 1980 625

2001

94

2002

125

2003

208

2004

217

2005

171

2006

146

2007

137

2008

127

2009

124

2010

155

2011

149

2012

122

2013

141

14Q1

38

Import and export of plate during 2001-2014

0

3500 3000 2500 2000 1500 1000 500

-4000

2000 1000

0

-1000

-2000

-3000

Import 1488 2117 3325 2510 2243 1553 1429 1273 1527 1391 1320 1157 1189 302

export 176 180 182 578 845 2037 2834 2879 1184 2480 2658 2675 2764 864

Net exp.-1313-1938-3143 -1931-1398 484 1404 1606 -343 1088 1339 1517 1575 562

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 14Q1

Supply of long steel and plate during 2001-2014

0

60000 10000 t

50000

40000

30000

20000

10000

0

35

30

25

20

15

10

5

Growth rate%

long steel 9088 10933 13211 15635 18535 21233 24577 24760 32127 35184 39505 43014 48569 11480

plate 6506 8436 11160 11949 15712 19021 22846 24490 30221 35024 37580 39261 43444 10653

long steel% 22.6 19.3 19.7 18.5 17.8 16.3 14.7 1.7 30.2 10.0 14.6 8.9 11.5 4.8

Plate % 15.7 24.6 32.7 9.9 23.0 17.3 25.8 6.2 23.3 14.0 8.1 3.6 10.4 0.9

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 14Q1


Output, import & export, supply of long steel and steel

Output of hot and cold-rolled plate during 2001-2014

0

10000

5000

15000

20000

25000

35000

30000

0

20 10

30

40

60 50

Hot output

Cold output

4087 5270 6657 8900 11068 1448417831 1953822406 2613827748 2846431078 7668

1188 1390 1614 2396 3327 5021 6420 6559 7472 9974 11171 1231413942 3548

Hot growth% 16.9 28.9 26.3 33.7 24.4 28.2 30.1

Cold growth% 11.0 17.0 16.1 48.5 38.9 42.5 30.0

8.1

2.6

13.6 15.0 7.9

15.6 30.4 16.5

1.9

8.8

9.2

12.1

0.1

10.1

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 14Q1

Import and export of hot-rolled plate during 2001-2014

1000 500

1500

2500 2000

-1500

-1000

0 -500

500

1000

2000 1500

0

import

export

Net export

118

-286

118

-531

123

-1194

421

-504

611

-104

1364

895

1947

1582

1885

1565

716

147

1355

992

1024

648

1082

732

1104

726

380

275

2001

404

2002

648

2003

1317

2004

926

2005

715

2006

469

2007

364

2008

319

2009

568

2010

362

2011

376

2012

351

2013

378

14Q1

105

Import and export of cold-rolled plate during 2001-2014

1500 1000

500

2500 2000

-2500

-2000

-500 -1000

-1500

0

1000 500

0

import

export 57 62 59 157 234 673 887 995 469 1125 1635 1593 1660 483

Net export -1027 -1407 -1949 -1427 -1294 -412 -178 41 -491 96 691 786 849 287

2001

1085

2002

1469

2003

2008

2004

1584

2005

1528

2006

1084

2007

1065

2008

954

2009

959

2010

1029

2011

944

2012

807

2013

811

14Q1

196

Supply of hot and cold-rolled coil during 2001-2014

0

20000

15000

10000

5000

25000

35000

30000

-5

20

15

10

5

0

25

40

35

30

Hot resource 4087 5270 6657 8900 11068 14484 17831 19538 22406 26138 2774828464 31078 7668

Cold resource 2215 2797 3563 3823 4621 5432 6598 6518 7962 9879 1048011528 13093 3261

Hot growth 16.9 28.9 26.3 33.7 24.4 28.2 30.1 8.1 13.6 15.0 7.9 1.9 9.2 0.1

Cold growth 6.5 26.3 27.4 7.3 20.9 12.8 23.4 -0.8 24.0 21.3 10.4 8.5 12.4 6.4

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 14Q1

Note:hot-rolled plate=medium and thick plate+hot-rolled coil+hot-rolled narrow strip; cold-rolled plate=cold-rolled coil+cold-rolled narrow strip+coated and

galvanized strip+electrical steel strip

Data source: National Bureau of Statistics, General Customs Administration, Steelhome Data Center


Output, import & export, supply of hot and cold-rolled steel

Note: HRC=hot-rolled sheet+medium wide strip+hot-rolled thin and wide strip

Data source: National Bureau of Statistics, General Customs Administration, Steelhome Data Center

Output of hot-rolled coil (HRC) during 2005-2014

16000

14000

12000

10000

8000

6000

4000

20000 10000t 18000

-5

-10

30

25

20

15

10

5

0

40 % 35

2000

0

capacity

growth

rate%

2005

5192

36.1

2006

6820

32.4

2007

8652

35.3

2008

9959

13.1

2009

11994

17.8

2010

14670

19.4

2011

15714

4.6

2012

16690

6.7

2013

18271

9.7

14Q1

4409

-3.1

Import and export of hot-rolled coil during 2005-2014

800

600

400

200

0

-200

1200

1000 10000t

-400 import

export

Net export

2005

582

404

-178

2006

351

856

505

2007

227

1004

778

2008

179

1055

876

2009

440

377

-63

2010

230

882

652

2011

196

526

330

2012

199

618

419

2013

244

663

419

14Q1

67

241

175

Apparent consumption of hot-rolled coil during 2005-2014 20000 10000 t 18000

16000

14000

12000

10000

8000

6000

4000

2000

-10

40

35

30

25

20

15

10

5

0

-5

%

0

merchantable

Growth of

merchantable%

2005

5370

29.1

2006

6316

18.5

2007

7874

33.7

2008

9084

12.8

2009

12057

30.0

2010

14018

13.5

2011

15384

7.1

2012

16271

6.2

2013

17852

10.0

14Q1

4236

-5.3


Output, import & export and supply of hot-rolled coil

The output and supply of hot-rolled coil in the 1st quarter of 2014 is 44.09 million tons and 42.36 million tons, decreased by 3.1% and 5.3% respectively on a year-on-year basis.

Note: medium and thick plate=extra thick plate+thick plate+medium and thick plate


Output of medium and thick plate during 2005-2014

1000

0

8000

7000

6000

5000

4000

3000

2000

10000

9000 万吨

-10

-15

30

25

20

15

10

5

0

-5

40

35 %

output

Growth%

3185

22.1

4023

23.9

5241

35.6

5971

13.1

5837

-1.8

6947

18.0

7345

6.2

6681

-9.7

6875

3.0

1721

5.6

2005 2006 2007 2008 2009 2010 2011 2012 2013 14Q1

Import and export of medium and thick plate during

0

700

600

500

400

300

200

100

900

800 10000 t

Import

export

Net export

157

41

428

326

824

703

795

668

325

206

430

311

484

317

450

310

426

302

134

107

2005

116

2006

103

2007

121

2008

127

2009

119

2010

120

2011

167

2012

140

2013

124

14Q1

27

Apparent consumption of medium and thick plate during 2005-2014

5000

4000

3000

2000

1000

9000

8000

7000

6000

10000 t

-15

15

10

5

0

-5

-10

35

30

25

20

%

0

total

Total %

2005

3144

13.7

2006

3697

15.4

2007

4538

28.2

2008

5303

15.9

2009

5631

6.7

2010

6636

16.8

2011

7028

6.4

2012

6371

-10.0

2013

6573

3.2

14Q1

1621

5.0


Output, import & export, supply of medium and thick plate

Output and supply of medium plat in the 1st quarter of 2014 is 17.21million tons and 16.21 million tons, year-on-year increased by 5.6% and 5.8% respectively.

Data source :State Statistics Bureau , General Customs administration, Steelhome Data Center

Output of hot-rolled narrow strip during 2005-2014

5000

4000

3000

2000

8000 10000t

7000

6000

-10

-15

20

15

10

5

0

-5

40

35

30

25

%

1000

0

capacity

growth

rate

2005

2690

34.7

2006

3641

25.5

2007

3938

14.2

2008

3608

-10.1

2009

4575

28.0

2010

4521

-0.6

2011

4688

10.3

2012

5093

4.4

2013

5932

15.8

14Q1

1538

3.9

Import and export of hot-rolled narrow strip during 2005-2014

80

60

40

20

0

140

120

100

10000t

-20

export

import

Net export

2005

18

50

32

2006

16

81

65

2007

16

118

102

2008

13

35

22

2009

9

14

5

2010

13

42

30

2011

12

13

1

2012

11

14

3

2013

10

15

6

14Q1

4

5

1

Apparent consumption of hot-rolled narrow strip

4000 3000

2000

1000

7000 10000t

6000

5000

-15

15

10

5

0

-5

-10

35

30

25

20

%

0

Total

Total %

2005

2658

32.75

2006

3576

24.6

2007

3836

13.4

2008

3586

-8.3

2009

4570

28.6

2010

4491

-1.2

2011

4688

11.1

2012

5090

4.4

2013

5926

15.7

14Q1

1535

3.8


Output, import & export, supply of hot-rolled narrow strip

Output and supply of hot-rolled narrow strip in Q1’2014 is 15.38 million tons and 15.35 million tons, increased by 3.9% and 3.8% respectively on a year-on-year basis.

Data source: State Statistics Bureau, Steelhome Data Center

item unit Q1 of 2014 Absolute growth rate%

2013 Absolute growth rate%

same period of 2013 Absolute growth rate%

GDP Fixed assets investment

100m Yuan 100m Yuan

128213

68322

7.4 17.6

568845 436528

7.7 19.6

118855 58092

7.7 20.9

Industrial increments 8.7 9.7 9.5

Export Total amount of retail social consumption Investment in real estate Fixed assets investment in traffic Fixed assets investment in railway Output of excavator Output of vehicles Completed shipbuilding Output of household A.C Output of household fridge Output of household freezer Output of household washing machines

100m dollars 100m Yuan 100m Yuan 100m Yuan 100m Yuan 10000 10000 10000 tonnages 10000 10000 10000 10000

4913 62081 15339 2070 650

4.14 626 951 4009 2164 489 1563

-3.4 12 16.8 13.2 15.9

8.2 10.8 -16.2 19.9 1.2 1.7 -3.5

22100 234380 86013 13976 6515

14.89 2387 6147 14333 9341 2085 7202

7.9 13.1 19.8 7.1 6.3

1.4 18.4 -24.7 11.6 10.6 9.4 8.2

5089 55451 13133 1828 561

3.82 579 1427 3490 2153 483 1601

18.4 12.4 20.2 -1.4 5.8

-32.3 13.5 -13.1 5.3 9.0 21.1 7.7


Main economic index and development of downstream industries related to steel consumption in Q1 of 2014

Date source : Steelhome Data Center

Capacity and utilization of crude steel

0

120000

10000 t

100000 80000 60000 40000 20000

50

110 100 90 80 70 60

output

capacity

15163 18237 22234 28291 35324 41915 48929 50306 57218 63723 68528 72388 77904 80000

17115 19735 26381 34103 42376 56315 61031 64431 71800 76420 85000 100000 105000 109000

utilization 88.6 99.0 96.4 93.5 92.4 84.9 83.4 80.2 84.0 86.0 84.9 78.3 76.0 74.8

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014e

%

Difficult to alleviate overcapacity of plate

Capacity utilization of crude steel is estimated to drop further in 2014

Capacity and merchantable of hot-rolled coil during 2004-2014

0

15000 10000

5000

20000

25000

10000t

0

50

40

30

20

10

60

90

% 80

70

capacity 5365 7925 10755 13285 17091 19154 21534 22534 22934 23334 23684

merchantable 3780 5192 6820 8652 9959 11994 14670 15714 16690 18271 17881

Ratio of merchantable

70.5 65.5 63.4 65.1 58.3 62.6 68.1 69.7 72.8 78.3 75.5

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Capacity and utilization of medium-and-thick plate during 2004-2014

0

6000

5000

4000

3000

2000

1000

7000

9000

8000

10000 10000t

0

60 40

20

80

120

%

100

capacity 2480 3610 4570 5320 6220 7810 8550 9020 9050 9050 8960

output 2570 3185 4023 5241 5971 5837 6947 7345 6681 6875 6980

utilization 103.6 88.2 88.0 98.5 96.0 74.7 81.3 81.4 73.8 76.0 77.9

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Capacity and utilization of hot-rolled narrow strip during 2004-2014

0

9000

10000t 8000

7000

6000

5000

4000

3000

2000

1000

0

120

%

100

80

60

40

20

capacity

output 1736 2690 3641 3938 3608 4575 4521 4688 5093 5932 6237

2004

2650

2005

3500

2006

4750

2007

5350

2008

5950

2009

7040

2010

8100

2011

8100

2012

8100

2013

8100

2014

8100

Capacity of cold-rolled coil during 2004-2014

0

16000 14000 12000

10000

8000

6000

4000

2000

capacity 2315 4555 6119 7171 8171 9246 10701 11871 12608 13063 13533

2004年 2005年 2006年 2007年 2008年 2009年 2010年 2011年 2012年 2013年 2014年

utilization 65.5 76.9 76.6 73.6 60.6 65.0 55.8 57.9 62.9 73.2 77.0 Data source: Steelhome Data Center

The capacity of hot-rolled coil increased by 3.5 million tons in 2014 compared to end of 2013, medium-and-thick plate down by 900000t, cold-rolled coil raised by 4.7 million

tons. The growth rate of plate capacity slows down dramatically.


Difficult to alleviate overcapacity of plate in spite of declined growth of capacity

Narrowing or even disappearing product differential between plates caused by overcapacity


Price movement of plate of moderate thickness, hot rolled coil, and hot rolled strip steel in shanghai (Jan 1, 2005 to Dec 5, 2014)

Source: www.steelhome.cn/data

Shanghai: plate of moderate thickness – Q235 14-20mm*2000

Shanghai: hot rolled coil– Q235B 5.75mm*2000*C

Shanghai: hot rolled strip steel– Q235 2.75mm*335*C

Basic views on domestic steel plate market this year


1. The growth of output and supply of plate slows down in 2014.

2. The capacity distribution is unreasonable and regional markets are pressured

under over-capacity.

● North China with a large plate capacity is a net resource outflow market where the price is lower than those in other regions. ●Focus on the influence of environmental protection policy and elimination of overcapacity

on the production of hot-rolled strip in North China.

2%

Unreasonable capacity distribution of steel

Capacity, market availability and regional flow of hot-rolled coil

Distribution of hot-rolled coil(HRC) capacity

middle-south,

3163, 13%

south-west,

1385, 6%

north-west,

680, 3%

north-east

3956, 17%

East China,

6260, 26%

north China,

8240, 35%

Distribution merchantable HRC in Q1 of 2014

north China,

1885, 43%

east China,

1130, 26% north-east,

634, 14%

north-west, 93, south-west,

235, 5%

middle-south,

435, 10%

Regional flow of HRC made by key enterprises in Q1 of 2014

middle-south, 525

, 18%

south-west, 88

, 3%

north-west, 190

, 7%

north-east, 132

, 5%

east China,

1078 ,

37%

north China, 868

, 30%

HRC: The north and north-east China are net resource outflow regions, and the east China and middle-south are net inflow regions.

Capacity distribution of medium-and-thick plate

east China,

3860, 43%

north China,


850, 9%

north-west,

170, 2% south-west,

300, 3%

middle-south,

1670, 19%

Output distribution of medium-and-thick plate in Q1 of 2014

middle-south,

377, 22%

south-west, 39, north-west, 44,

2% 3%

east China,

656, 38%

north China,


149, 9%

Regional flow of medium-and-thick plate made by key enterprises in Q1 of 2014

north China, 300

, 22% east China, 614

, 45%

north-east, 84

, 6%

south-west, 52north-west, 42

, 4% , 3%

middle-south, 267

, 20%


Comparison of capacity, merchantability and regional flow of medium-and-thick plate

Medium and thick plate: The north and north-east China are net outflow regions, and east China is net inflow region.

2%

Capacity distribution of cold-rolled coil

middle-south,

1992, 15%

south-west,

660, 5%

north-west,

301, 2%

north-east,

1224, 9%

east China,

5529, 41%

north China,

3827, 28%

Merchantable distribution of cold-rolled coil in Q1 of 2014

north China,

591, 29%

east China,

764, 37%

north-east,

161, 8%

south-west, 52, north-west, 38, 3%

middle-south,

419, 21%

Regional flow of cold-rolled coil made by key enterprises in Q1 of 2014

middle-south, 216

, 25%

south-west, 17

, 2%

north-west, 54

, 6%

north-east, 59

, 7%

east China, 397

, 47%

north China, 106

, 13%


Comparison of capacity, merchantability and regional flow of cold-rolled coil

Cold-rolled coil: The north China is net resource outflow region and the east and south-middle China are net resource inflow regions.

1%

Capacity distribution in 1st quarter of 2014

north China,

1249, 82%

east china,

191, 12% north-east, 28,

2%

south-west, 30, north-west, 23, 2%

middle-south, 18,

1%

Regional flow in 1st quarter of 2014

north China, 286

, 57% east China , 157

, 31%

south-west, 0 north-west, 16

0% , 3% Middle south, 33

, 7%

Capacity distribution of hot-rolled plate

Hot-rolled plate ,

23684,

58%

hot-rolled narrow strip ,

8100, 20%

medium and thick plate,

8960, 22%


Distribution and regional flow of hot-rolled narrow strip steel

north-east, 10

, 2%

Hot-rolled narrow strip steel：82% output is concentrated in the north China, specifically Hebei province. Among 400 million tons of

Hot-rolled plate, the narrow strip accounts for 20%. Pay attention to the influence of environmental protection policy and elimination of

overcapacity on production of hot-rolled narrow strip. A suppressed output will benefit the alleviation of overcapacity of hot-rolled coil

and medium and thick plate.

Market price gradient caused by unreasonable capacity distribution

Unreasonable distribution of steel capacity

Average price movement of hot rolled coil in Shanghai, Guangzhou and Tianjin by Steelhome (China) (Jan 1, 2011 to Dec 5, 2014)

Source: www.steelhome.cn/data

Shanghai: Hot rolled coil

Guangzhou: Hot rolled coil

Tianjin: Hot rolled coil



1. The output and supply of plate will slow down in 2014.

2. Capacity distribution of plate is unreasonable and the regional markets face

great pressure from overcapacity.

3. The decline of plate import is limited, and sharp increase of export will

cause threat of anti-dumping and anti-subsidies.

● Since 2009 the import and export of steel plate has been kept stable but the export structure changed a lot.

Due to export tax refund for cold-rolled plate, its export has soared and exceeded that of hot-rolled.

● The most imported plates come from Japan, South Korea and Taiwan, used for production

or reprocess in foreign-capital enterprises or JVs, leaving small space for decline of import. ,

● The majority of our hot-rolled plates are exported to Asia and the market of

exported cold-rolled plates are dispersed. The export of hot and cold-rolled

plates rose greatly in the 1st quarter of 2014, facing the risk of anti-dumping and

anti-subsidies.

Limited decline of import of steel plate

Stable import and export of plate, big change in structure of export mix

Import of steel and plate during 2001-2014

0

3500

3000

2500

2000

1500

1000

500

4000 10000 t

78

88 86

84

82

80

90 Ratio %

steel 1722 2449 3717 2930 2582 1851 1687 1539 1764 1643 1563 1362 1408 359

plate 1488 2117 3325 2510 2243 1553 1429 1273 1527 1391 1320 1157 1189 302

ratio% 86.5 86.5 89.5 85.7 86.9 83.9 84.7 82.7 86.6 84.7 84.4 85.0 84.4 84.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 14Q1

Export of steel and plate during 2001-2014

0

6000 5000 4000

3000

2000

1000

7000 10000 t

0

60 50 40

30

20

10

70 Ratio %

steel 474 545 696 1423 2052 4301 6265 5918 2458 4245 4897 5560 6234 1833

plate 176 180 182 578 845 2037 2834 2879 1184 2480 2658 2675 2764 864

ratio% 37.1 32.9 26.2 40.7 41.2 47.4 45.2 48.7 48.2 58.4 54.3 48.1 44.3 47.1

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 14Q1

2500 2000

1500

1000

500

0

Hot-rolled 404 648 1317 926 715 469 364 319 568 362 376 351 378 105

Cold-rolled 1085 1469 2008 1584 1528 1084 1065 954 959 1029 944 807 811 196

Import of hot-rolled plate and cold-rolled plate during 2001-2014 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 14Q1

2500 2000

1500

1000

500

0

Hot-rolled 118 118 123 421 611 1364 1947 1885 716 1355 1024 1082 1104 380

Cold-rolled 57 62 59 157 234 673 887 995 469 1125 1635 1593 1660 483

Export of hot-rolled plate and cold-rolled plate during 2001-2014 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 14Q1

Data source: General Customs administration, Steelhome Data Center


Majority of imported plates come from Japan, South Korea and Taiwan

Source of imported hot-rolled plate during 2003-2014

600 400

200

1400 1200

1000

800

0

50

40

30

20

10

100

90

80

70

60

0

Total

Asia 638 519 475 384 298 269 386 314 333 308 343 96

Ratio% 48.5 56.2 66.2 81.9 82.0 84.3 68.5 86.7 88.6 88.0 91.0 91.4

2003

1317

2004

924

2005

717

2006

469

2007

364

2008

319

2009

564

2010

362

2011

376

2012

350

2013

377

14Q1

105

Distribution of hot-rolled plate by exporting region in 2013

70kt，1.8%

Europe

280kt，7.4%

others

Japan 2320kt，67.7%

South Korea 740kt, 21.6%

Taiwan

330kt，9.6%

others in Asia

40kt，1.2%

Asia 3430kt,

90.8%

Source of imported cold-rolled plate during 2003-2014

1000 500

2000 1500

2500

10

0

40

30

20

50

80

70

60

90

100

0

Total

Asia 1322 1181 1119 960 984 893 809 964 875 746 748 188

Ratio% 65.8 74.6 73.1 88.5 92.4 93.6 84.7 93.7 93.8 92.5 92.3 92.8

2003

2008

2004

1583

2005

1530

2006

1085

2007

1065

2008

954

2009

955

2010

1028

2011

933

2012

807

2013

811

14Q1

202

Distribution of cold-rolled plate by exporting region in 2013

others

260kt，2%

Europe

470kt，5.7%

Japan

2790kt，34.4% South Korea

3110kt，38.3%

others in Asia

240kt，3%

Taiwan

1340kt，16.5%

Asia 7480kt，

92.3%


8万吨，1%


Import of steel plate accounts for 85% of imported steel

Export of hot-rolled plate and main destinations during 2003-2014

1000 500

1500

2000

2500

0

40

30

20

10

60

50

70

80

90

100

0

Total

Asia 92 341 528 860 1308 1308 553 994 773 830 821 277

Ratio% 74.6 81.1 86.5 63.0 67.2 69.4 77.2 73.3 75.5 76.7 74.4 72.8

2003

123

2004

421

2005

611

2006

1365

2007

1947

2008

1885

2009

716

2010

1356

2011

1024

2012

1083

2013

1103

14Q1

380

Regional distribution of exported hot-rolled plate in 2013

others

630kt，5%

South Korea

1120kt，10%

Europe

520kt，5%

Middle East

550kt，5%

South Korea

3110kt，29%

越南

177万吨，16%

India

490kt，4% Taiwan

800kt，7%

Thailand

310kt，3%

others in Asia 1750kt，16%

Asia

8220kt，75%

Export of cold-rolled plate and main destinations during2003-2014

0

1200

1000

800

600

400

200

1800

1600

1400

0

70

60

50

40

30

20

10

100

90

80

Total 59

Asia 37

Ratio% 63.1

157

70

44.5

234

146

62.4

673

210

31.1

887

280

31.6

995

360

36.1

468

229

48.9

1074

427

39.8

1591

690

43.3

1594

703

44

1660

751

45

483

212

44

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 14Q1

CIS 1200kt，8%

North America

780kt，5%

South America

2410kt，15%

Africa

950kt，6%

Middle Rest

1680kt，10%

South Korea

2450kt，15%

others in Asia

5060kt，30%

Regional distribution of exported cold-rolled plate in 2013 Oceania 80kt, 1% Europe

1980kt，12%









4. Post-settlement mode is generally applied by steel manufacturers with

low market inventory and price.

● At present, since the dealers keep low or no inventory, the steel manufacturers have to expand direct selling or market products by themselves.

● Close-to-market pricing or post-settlement mode is commonly used by domestic steel

manufacturers making the steel price difficult to rise and easy to fall.

Higher ratio of direct selling by steel manufacturers with low market inventory

Higher ratio of direct selling by steel manufacturers as shown by statistics

45 % 40

35

30

25

20

15

10

5

0

60000

10000 t

50000

40000

30000

20000

10000

0

sales

direct

selling ratio% 18.3 18.3 19.4 21.3 20.0 32.4 31.4 30.4 31.6 34.8 36.1 33.8 34.6 36.3

sales and direct sales of steel made by key steel enterprises during 2001-2014 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 14Q1

12129 1470716950 20539 23822 2806333077 33620 3822645209 47799 49534 5501913231

2219 2688 3295 4367 4758 9095 10378 10210 1206715752 17266 16727 190384800

45 % 40

35

30

25

20

15

10

5

0

30000

10000 t

25000

20000

15000

10000

5000

0

sales

direct

selling

Ratio% 15.4 16.4 17.9 18.3 17.5 31.7 25.1 24.6 26.5 29.7 30.7 28.9 29.2 31.5

sales and direct sales of long steel made by key enterprises during 2001-2014 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 14Q1

6960 8469 9604 11124 12408 1421615599 14896 1784319675 21891 23396 262606077

1071 1388 1716 2035 2177 4507 3921 3662 4734 5851 6712 6759 7665 1915

Sales and direct sales of steel plate made by key steel enterprises during 2001-2013

30000

10000t

25000

20000

15000

10000

5000

0

45 % 40

35

30

25

20

15

10

5

0

Sales

Direct

selling

Ratio% 22.8 19.8 21.4 24.8 22.5 33.0 36.5 34.3 35.6 38.5 40.6 37.9 39.3 40.1

Data source: CISA, Steelhome Data Center

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 14Q1

4476 5476 6510 8554 10446 1281916230 17344 1897023945 24370 24490 269606728

1018 1085 1393 2119 2349 4229 5919 5956 6750 9224 9884 9281 105922699

The ratio of direct selling for key enterprises is 36.3% in 2014,

1.7% higher than that in 2013. The ratio for long steel section

is 31.5%, Increased by 2.3%, and the ratio for sheet is 40.1%,

increased by 0.8%.

Basic views on domestic steel plate market in 2014

Basic views on domestic steel plate market in 2014




3. The decline of plate import is limited, and sharp fast increase of export will


4. Post-settlement mode is generally applied by steel manufacturers with low

5. market inventory and price.

5. The domestic market price of steel is at the bottom.

Current domestic plate price at the bottom

Prices of steel, plate, raw materials and manufacturing cost of pig iron

of steel-making in key enterprises since 2014

Steelhome

Price index steel medium and thick plate Hot-rolled coil Hot-rolled narrow strip Cold-rolled coil coke Iron ore Manufacturing cost of in key enterprises Pig iron for steel-making

Jan.-May 2014 3688 3595 3481 3265 4307 1119 950

Q1, 2014

2256

2013

3929 3806 3758 3534 4653 1341 1013

2013

2329

Same period of 2013 4138 4040 4029 3659 4851 1497 1048

Q1 2013

2459

Compared to last year

-241 -211 -277 -269 -346 -222 -63

Compared to

last year

-73

Compared to same period

-450 -445 -548 -394 -544 -378 -98

Compared to

same period

-203

Data source: CISA, Steelhome Data Center

By May 9, the price index SHCNSI of Steehome(China) dropped 214 yuan compared to that in 2013 ; the price index dropped

for medium and thick plate 211 yuan, 277 yuan for hot-rolled coil, 269 yuan for hot-rolled narrow strip, 346 yuan for cold-rolled coil,

222 yuan for coke, 63 yuan for iron ore. Due to lower price of raw materials, the manufacturing cost dropped 215 yuan/t, smaller

than the decline of steel price.

The manufacturing cost of pig iron for steel-making among key enterprises in Q1 of 2014 is 2256 yuan, down by 73 yuan/t

compared to 2013. Although it is expected to fall further in April and May, the large-scale losses of steel enterprises will not be changed.








4. Post-settlement mode is generally applied by steel manufacturers with low

market inventory and price.

5. Current market price of plate is at the bottom.

6. The successful listing of hot-rolled coil will create favors conditions for

plate manufacturers to stabilize operation and manage risks.

Sept

27

Jun 2

7

Mar

27

Dec 2

7

March 21 March 28 April 4 April 11 April 18 April 25 May 2 May 9

March 21 March 28 April 4 April 11 April 18 April 25 May 2 May 9

Data source: Shanghai Futures Exchange, Steelhome Data Center

HRC futures regarded as vane for global steel at Shanghai Futures Exchange

Futures and spot goods of steel and changes of basis

Trend of prices of rebar futures and spot goods during 2009-2013 5500

5000

Settlement price of main futures contract and price of spot goods of hot-rolled coil

3400 4500

3350

4000

3300

3500

3450

Settlement price of rebar futures

Shanghai rebar 20mm HRB400(actual weight)

Changes in basis of rebar futures during 2009-2013

3500

3000

800

600

400

200

0

-200

-400

-600

-800

Settlement price of hot-rolled coil futures

Shanghai hot-rolled coil Q235B5.75*1500*C

Changes in basis of settlement prices of

main contract of hot-rolled coil futures

3250

3200

100

75

50

25

0

-25

-50

-75

-100

Mar

27

Mar

27

Mar

27

Mar

27

Mar

27

Mar

27

Mar

27

Mar

27

Mar

27

Mar

27

Mar

27

Jun 2

7

Jun 2

7

Jun 2

7

Jun 2

7

Jun 2

7

Jun 2

7

Jun 2

7

Jun 2

7

Jun 2

7

Sept

27

Sept

27

Sept

27

Sept

27

Sept

27

Sept

27

Sept

27

Sept

27

Sept

27

Sept

27

Dec 2

7

Dec 2

7

Dec 2

7

Dec 2

7

Dec 2

7

Dec 2

7

Dec 2

7

Dec 2

7

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Basic views on current steel and plate market

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