China to focus on improving the structure of steel production

In 2019, China's steel industry will shift its focus to optimizing capacity structure, including products, location and ownership in 2019, rather than reducing overall capacity, the head of the country's metallurgy association said on Monday.

China is entering the fourth year of its supply chain reform to streamline its bloated heavy industry and strive for "quality development" from "rapid development."

Since 2016, the world's largest steel producer has dismantled nearly 300 million tonnes of obsolete steel and low-grade steel production facilities, but about 908 million tonnes still remain.

But he also acknowledged that oversupply pressures from illegally added capacity and new projects remain as factories try to capitalize on high profits.

“The main source of China's economic growth has been consumption through investment, which leads to lower demand for steel products and higher requirements for product quality,” Yu said.

The China Metals Planning and Research Institute, a government consulting firm, predicted last month that the country's steel consumption would fall to 800 million tonnes in 2019 from 820 million tonnes in 2018 due to declining demand in the real estate, automotive and energy sectors.

Auto sales in China fell 2.8 percent in 2018 from the previous year, the first annual decline in 28 years.

Yu also urged steel mills to prepare for further tensions between China and the United States and pay close attention to the indirect impact on Chinese steel exports.

Total steel exports fell to 69.54 million tons last year, the lowest level since 2013, data from the General Administration of Customs showed on Monday.