28/10/2014 – Chinese demand for steel cooling down- BlueScope CEO

Mr Paul O’Malley CEO of BlueScope Steel said that the days of high growth in Chinese steel demand are overMr O’Malley said that “What we’re seeing on the ground is a significant reduction in confidence domestically within China as it pertains to building and construction, which is where a lot of steel goes. Yes there is still growth but the hey day is over. It may well return, but at the moment the heyday is over.”Mr O’Malley said that “I’ve been saying for a couple of years that I think China has reached peak steel intensity. As a global trend we are seeing customers that were building in China are now building in the United States. They are going back to the market that’s got better growth, lower energy costs and better opportunities.”The BlueScope boss believes China is going through a stabilisation process, saying the incentive for Chinese steel managers to incrementally increase production and employment has given way to a focus on cutting pollution and boosting profitability.Mr O’Malley said that “We do have a lot of people who used to work in BHP Minerals in our business and their comment is: ‘the miners will ultimately always over do it’. I think that’s playing out. Australia may despatch more tonnes of iron ore but I think the absolute steel growth rate in China is going to slow dramatically.”He said that “The combination of cheap energy, flexible labour rules that allow rapid hiring and firing and significantly improved budget positions at state level are fuelling growth in the world’s biggest economy. You’d have to work really hard to stop the US growing at the moment. I don’t think even the politicians can stuff it up to be frank.”BlueScope is one of Australia’s biggest manufacturers. The steel giant operates in 17 countries and employs more than 16,000 people, including around 2500 in China. It is the biggest global supplier of engineered building solutions to industrial and commercial markets.

Source – SteelGuru.com