China's efforts to reduce overcapacity in the steel sector in the past few years may be reversed after the cuts in production capacity spurred steel prices, increased profits among steel companies and encouraged them to invest in capacity expansion.
In China, which currently produces more than half of the world's steel, national production increased 8.1% year on year in 2018 to 928 million tonnes. The country also produced 231 million tonnes this year in the first quarter, up 9.9% year on year.
This increase in production could potentially cause supply to outstrip demand again, putting pressure on the industry and affecting profitability.
According to the China Metallurgy Association (CISA), while steelmakers cut their production capacity from lower grade steel, investment in smelting and rolling of ferrous metals increased by 30% in the first quarter of this year.
In response, the CISA vice president called for greater discipline in the industry and for steelmakers to prevent illegal new capacity, but focus on mergers and acquisitions, while remaining vigilant about differences in supply and demand levels.
China Steel Sector Remains Overcapacity Concerns
|
Azovpromstal® 1 May 2019 г. 12:49 |
