On the Press Release on 2015 China Economic Forecast held on Jan. 23, 2015, Prod. Yang Cuihong released “Forecast on 2015 China’s Agricultural and Industrial Situations, World Commodity Prices, and Water Demand”.
According to Prof. Yang’s report, China’s grain sown area is expected to increase slightly in 2015 reaching 113.3 million hectares, which is 560 thousand hectares more than that in 2014. On the condition that there is no extreme weather, the grain output will rise by 4 million tons or up 0.7% over 2014. However, if severe weather occurs in the late summer and/or autumn of 2015 in major grain production areas, the autumn grain output may decrease and further cause the decline of national grain output. The cotton acreage in 2015 will continue to drop; the oil-bearing crops will slightly increase in terms of the sown area in 2015, while yield will increase if no extreme weather occurs during the growing period.
For steel industry, considering the slowdown of China’s economic growth guided by the “new normal” theory and the long-term overcapacity of steel industry, it is expected that the steel industry will maintain a low growth at the first half of 2015. However, with vigorous implementation of the policy of regulating production capacity, the production capacity of steel will be further controlled. Steel industry is expected to recover gradually in the latter half of 2015. Econometric models predicted that in 2015, crude steel production will reach 843 million tons, an increase of 3.69% over 2014; steel production will be approximately 1.10 billion tons, an increase of 3.14% over 2014. The coal industry will also face greater market pressures in 2015. It is predicted that China’s coal production in 2015 will reach 3.593-3.611 billion tons, a decrease of 0.83% over 2014. It is expected that the automobile industry will continue to downturn slightly in 2015. Economic model predicts that China’s automobile production and sales will reach approximately 25.5 million and 25.06 million respectively in 2015, an increase by 6.8% and 6.6% over 2014.
In 2015, the total water demand is expected to be about 627.59 billion cubic meter in China, will increase 0.71% from 2014. Agricultural water demand is about 395.79 billion cubic meter, accounting for 63.1 percent of the total water demand, which is the largest part of water demand. Water demand for production (industrial water demand) will slightly increase, the volume is about 141.86 billion cubic meter, accounting for 22.6 percent of the total water demand. Domestic water demand is increased steadily, which is about 79.14 billion cubic meter, accounting for 12.6 percent of the total water demand. Ecological water demand is about 10.8 billion cubic meter, accounting for 1.7 percent of the total water demand.
With an assumption that world economic recovery is weak and US dollar appreciates, we expect world commodity prices to drop significantly in 2015. The Reuters/Jefferies CRB Index will fall to 272 in 2015, down 6% from the average in 2014. And WTI crude oil futures price is expected to fluctuate between 40 and 85 U.S. dollars per barrel in 2015, and the average price will drop to 72 U.S. dollars per barrel, down 23 percent from the average in 2014. The dramatic surge in US shale oil production will lead to abundant supply of global oil market. Together with the weak global economy and appreciation of U.S. dollars, those factors will depress the oil price.