Contents page
Executive summary 3
China steel—risks ratchet up 4
— 2011 data have increased risks............................................................................4
— Why was Q411 steel output so weak?................................................................11
2012+ scenario analysis 13
— Near-term tension in the market .........................................................................13
— Scenario analysis while waiting better data ........................................................13
— Unique dynamic price feedback loops ................................................................15
— Problematic China iron ore production................................................................16
— Scenario conclusions .........................................................................................16
— Equity impact of scenario analysis......................................................................17
Intensity of use revisited 20
— UBS’s continual review of China steel IoU..........................................................20
— How fast will IoU fall? .........................................................................................21
Proprietary modelling of China steel consumption 23
— Specific drivers reviewed....................................................................................23
— Non-construction steel drivers ............................................................................25
— Consumption modelling results ..........................................................................26
— Housing construction the key .............................................................................27
— Social housing—hope for 2012 but fading thereafter ..........................................28
— Non-construction activity and steel .....................................................................30
Further context 32
— Politics of transition ............................................................................................32
— Scrap considerations in raw materials supply.....................................................34
— Read through to other commodities....................................................................35