Winter Olympics Accelerating Transformation and Upgrading of Regional Steel Industry

Beijing, together with Zhangjiakou, a city in northern China's Hebei province, won the bid to host the 2022 Winter Olympic Games. Beijing will be the first city in the world ever to host both Summer and Winter Olympics. The Winter Olympics will impose great influence on development of Chinese steel industry especially for regional steel industry.

MPI’s comments: Successful bid for 2022 Winter Olympics will boost industrial structure upgrading in Hebei Province with huge steelmaking capacity and serious air pollution, although it will not necessary to build stadiums on a large-scale and will not have enough power to drive steel demand by construction of high-speed rail and airport. Environmental protection and backward capacity elimination will be deemed as major tasks for Hebei Province. It is expected that steel capacity in Hebei Province will decrease by 38% and concentration up to 45% in the coming seven years.

Domestic Steel PMI Rebounding in July

China steel PMI was 41% in July increased by 3.6 percentage points month-on-month, which indicated a better condition of the steel industry. However PMI was always below 50% in the past 16 months representing an outstanding contradiction between supply and demand.

MPI’s comments: Steel demand is expected to be improved due to stabilization and recovery of macroeconomy in recent times. Crude steel output will possibly be declined in a short-term caused by implementation of stricter environmental regulations. And steel export will be maintained at the higher level to relief supply stress to a certain extent. However growth of steel price will be limited because of poor capital support.