China Have a Long Way to Go to Cut Steel Capacity

It is always a major topic for China to cut steel capacity, China will ban the low steel and make sure to prevent the steel market into a mess.

Chinese steel products price increased because of the reducing capacity policy.

Cut steel capacity still have a long way to go. And because of the reduce of the steel capacity, China steel products like carbon steel plates, carbon steel pipes and steel profiles get popular again. From National Bureau of Statistics data, the first two months of this year, coal mining price rose an average of 39.0%, compared the same time last year. Benefit from price rise rapidly for coal and steel products, Chinese steel manufacturers profits improved greatly. The first two months of this year, coal mining industries get over the loss status and made profits 43.8 billion CNY. Ferrous metal and rolling processing industry total profits increased 21.1 times than last year.

It is a hard work to cut steel capacity for Chinese steel products.

As the steel market situation improved and price rise again, new problems happen during the process of cutting steel capacity. Some places and companies hold the move to wait and see how is the policy going. Other companies didn’t have too much passion on it. Therefore, it is a hard work to reduce the production capacity for steel products.

Iron and steel products still overcapacity

Although it was successful last year for reducing production capacity, but there is still a long way to go. At present, iron and steel products, coal industries keep in a status of overcapacity. Oversupply pattern have not change basically, industry capacity utilization has not rebound to normal levels. Once reducing capacity work in a lower speed, the industry will go down to the bottom again. Bad market will be shown again like two years ago, price reduced a lot, company had a big loss. So we shall have much more confidence and determination on cutting capacity.