CISA: China’s 2012 Steel Consumption to Reach 700 Million Tons

China's total crude steel demand for 2012 has been projected to grow 4 per cent to 700 million tons even as Chinese steel mills remain cautious to buy the commodity, the China Iron and Steel Association (CISA) said on Thursday.

Spot iron prices held steady on Thursday, but it may not be enough to promote a buying binge in China.

"Enterprises are facing increasing operating risks, under pressure from a variety of factors such as rising costs, falling demand and difficult and expensive financing," Zhu Jimin, chairman of CISA and also head of Shougang Group, said in a speech during CISA's annual meeting. Shougang Group is one of the country's biggest steelmakers,

China in 2011 instituted a number of policies to regulate the real estate sector which had tremendously quenched domestic appetite for steel. If said tighter regulations continue and not corrected or adjusted, Zhu said China's steel consumption, along with decelerating growth in domestic manufacturing, railway, shipbuilding and auto sectors, could worsen in 2012.

Steel mills, generally, will not buy until there is a need.

"I don't think anyone would make any big purchases from the spot market this week, but I expect buying to increase a little on Jan. 10 as they seek to replenish stocks ahead of the Chinese new year," Reuters News quoted an unidentified Shanghai-based trader as saying.

The trader said there are currently some steel mills with stocks enough to last for 30 days, although there are some good only for a week. "They will have to buy to keep running."

According to the Steel Index, the price of 62-percent iron ore .IO62-CNI=SI stood at $138.80 per tonne on Wednesday, 50 cents up from the previous trading day.

China's overall crude steel yield from January to November 2011 stood at 630.98 million tonnes, 9.8 per cent up from a year ago, official data from the National Bureau of Statistics said.

Import prices for iron ore averaged $166.2/ton in the first 11 months, up 31.5%.