Near Record Chinese Steel Production But No Growth

John Robertson


Chinese steel production in the first two months of 2015 is estimated by the World Steel Association to have fallen by 0.2% compared with the corresponding period in 2014. The implied transition to a less metal intensive economy was always to be expected despite the unrealistically contrary expectations held by some about when growth might come to an end. In 2014, for example, China opened approximately 8,000 kilometres of new rail line. In 2015, the national government is aiming to do something similar. Many uses of steel do not lend themselves to never-ending growth. The same constraint does not necessarily apply to other metals. Aluminium, nickel and copper, for example, still have a similar infrastructure connection but are more likely to also depend on population growth and private spending decisions. Quite possibly, the steel intensity of Chinese economic activity will decline even as the intensity of use of other metals more capable of sustaining growth in the long term is on the rise.

John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...


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