A good news has come to the sluggish steel industry. On July 31, Beijing together with Zhangjiakou won the right to host the 2022 Winter Olympic Games, a piece of news that rallied steel corporations. Based on the statistics collected in the 2008 Beijing Olympic Games, the Winter Olympic Games will bring a large demand of steel and allow the steel industry to recover within the next 7 years.

Demanding 55 million tons building steel annually

Based on the planning of Olympic Winter Games Bid Committee, 2022 Beijing Winter Olympic Games will build three venue clusters in Beijing downtown, Yanqing and zhangjiakou. The skiing event will be held in zhangjiakou, to which Beijing is planning to build an high-speed rail. Besides, the construction of venues, surrounding real estates, highway, and bridges, etc. will fuel the demand of building steel.

As for the 2008 Beijing Olympic Games, China Government had invested 280 billion CNY on infrastructure within the 7 years before the opening. During this period, the construction required 85 million tons of building steel annually.

It is estimated by the professional institutes that during 2016 to 2022, the indirect demand of building steel will be 55 million tons annually, within which the construction of real estate requires 44 million tons and the left 11 million tons is for infrastructure construction.

In fact, the annual 55 million demand of building steel carries a limited promotion on steel industry. As journalist learned, the demand of building steel is still in a large degree depending on real estate. Based on the statistics, real estate takes 50% of the whole demand of building steel while infrastructure takes only 15%, which has a limited promotion to the demand of steel industry.

SME facing upgrading challenge

The construction of venues and relative infrastructure for Winter Olympic Games inclines to demand high-end products, which gives more opportunities to premium enterprises while steel SME will face the challenge of elimination and upgrading.

The bankruptcy of small steel enterprises will eliminate the influence brought by inefficient capacity and drive the price of steel products to reasonable level. In fact, the steel price gradually rises, stimulating by the news of military parade and successful bid for hosting the Winter Olympics recently. As the data from professional institutes indicates, the composite index of domestic spot steel price closed at 85.95 last week, 2.34% increased. The domestic steel price has been continually rising for two weeks and the increase rate, to some extent, has enlarged.