March 5 (Bloomberg) -- Chinese demand for steel for automobiles may be higher than last year as the government encourages spending, Baosteel Group Corp., the nation’s third-largest steelmaker said.
“The government is encouraging domestic demand,” Xu Lejiang, chairman at Baosteel that supplies half of China’s automobile steel, said today in an interview in Beijing. “Auto will be a main driver for demand of our products.”
China excluded foreign brands from a preliminary list for official-vehicle purchases last month, fueling speculation the government is stepping up efforts to protect its domestic industry as they struggle to compete against global producers. Chinese car sales may also get a boost after the central bank cut reserve requirements for the second time in three months in February to increase lending and sustain growth.
Still, demand for steel used in home appliances may be curbed by slower global growth, Xu said.
“The home appliance sector isn’t looking good because of weaker exports,” Xu said. “The U.S. and other developed countries are more prudent in retail consumption due to the economic slowdown.”
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