OREANDA-NEWS. October 28, 2015. So I’m outside smoking a cigar (yes, my one bad habit) at Chicago’s Fairmont Hotel during a break from last week’s sessions of worldsteel-49 — the annual gathering of top global steelmaking CEOs. A tall, distinguished-looking gentleman joins me, lighting a cigarette.

It’s Haijian Gao, chairman of China’s Magang (Group) Holding Co. Ltd.

Its iron and steel unit, known as MaSteel, has an annual production of about 18 million mt, ranking it in the top 20 of global steelmaking companies.

We shake hands, introducing ourselves. “Platts?” he queries, squinting and exhaling a puff of smoke. “Yes, Platts,” I answer, showing my registration badge. “But maybe you know IODEX [our iron ore benchmark price assessment]?”

He nods, inhaling. His marketing manager, Maohan Zhang, joins us.

“Yes, IODEX, I know, I know,” says Zhang. I shake hands with Zhang.

Gao turns and asks me, “So what do you think needs to happen with steel? When does this business improve?”

I smile and tell him, “That’s why you are chairman; I’m supposed to ask the questions, you beat me to it.”

Still, I want to be sure to respond respectfully. Drawing in some smoke, I politely tell him: “I think China needs to use more of its own steel.”

He waves his hand, the one with the cigarette between his fingers, a trail of smoke wafts toward North Columbus Drive. “You see here,” he gestures expansively. “Here, in Chicago, in the United States, in countries like Japan, when you look around, you see much steel. You are right. In China, we do not use enough. You do not see as much. For a big country, with a massive population, we need to use much more steel.”

But if anything, China will consume less steel this year than in 2014 — and a lower proportion of what it produces compared to last year.

This year China is on track to produce 809 million mt of crude steel, based on worldsteel monthly data through September and calculated at an annualized rate. Worldsteel forecasts that China will use nearly 686 million mt of finished steel, or just below 85% of the crude steel it produces. In 2014, China used 711 million mt of finished, or slightly more than 86% of its 823 million mt of crude steel production.

China’s seemingly overnight steel demand erosion is happening in a country that produces more than half of all the steel made globally (more than 800 million mt of about 1.6 billion mt worldwide). This leaves some 100 million-110 million mt for China to export.

That export tonnage potential exceeding 100 million mt represents more than, or close to, the total output of some major steelmaking countries. The US last year produced 88.3 million mt, according to worldsteel. India produced 83.2 million mt. Japan produced 110.7 million mt. Russia produced 70.7 million mt.

No wonder there is now the prospect of even more steel trade cases being filed against China, cases alleging the country is unfairly dumping its steel.

I go there, but Gao doesn’t want to get into that topic. Abruptly, he extinguishes his cigarette.

“We just need to market more steel in China like it’s done here,” he says.