SHANGHAI--China's goal to become a consumption-driven economy
will lead to sustained demand growth for the global stainless steel
market, said a top executive from the world's largest stainless
steel producer, Outokumpu Oyi (OUT1V.HE).
Despite analysts being divided over how long China's economic
rebound may last, "China is a growth engine for us and will become
a profitable market in the future," said Austin Lu, president of
Asia Pacific.
Although Europe is currently the company's main market, China
promises to be an important source of revenue in the coming years,
as a result of government-planned reforms aimed at shifting from an
export-dependant economic growth model to one driven by private
consumption.
China currently accounts for half of Outokumpu's business in the
Asia-Pacific region, according to Mr. Lu.
A growing urban population and an environmentally friendly
society would mean more demand for sophisticated raw materials such
as stainless steel, said Mr. Lu, estimating annual demand growth of
5%-6% from China until 2020.
Recent data showed resilient growth in China's economy, offering
the central government the freedom to focus on structural reforms
such as financial liberalization, measures to promote labor
mobility and a push for green energy.
China consumes 60% of global stainless steel supply. Stainless
steel has widespread applications, ranging from silverware to
high-rise edifices.
Global commodity prices have remained under pressure since the
beginning of the year, as investors are concerned that a slowdown
in China, the world's largest consumer for most commodities, would
bring an end to elevated prices that have generated high returns
over the past decade.
Outokumpu will focus on construction of skyscrapers and landmark
projects in China in the coming years, given its global expertise
in the area, while partnerships with Chinese state-owned companies
in the energy sector are also likely to rise in the next two to
three years, according to Mr. Lu.
In June, the company signed a strategic partnership agreement
with Sinopec Group to supply stainless steel for use in piping to
Sinopec subsidiary China Petrochemical International Co.
"Sinopec has a lot of liquefied natural gas projects, and those
are what we're looking to be involved in," Mr. Lu said.
Mr. Lu also said his company hopes to eventually set up a fourth
global research and development center in Shanghai. The company has
R&D centers in Germany, Sweden and Finland.
Write to Yue Li at yue.li@dowjones.com
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