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China to focus on improving steel capacity structure - CISA Chairman

Steel News - Published on Tue, 15 Jan 2019

Image Source: Business Recorder
Reuters reported that China’s steel industry will shift its focus to optimising capacity structure, including products, location and ownership, in 2019, from reducing overall capacity. An executive of the country’s iron and steel association said that China is entering the fourth year of its supply-side reform push to streamline its bloated heavy industry and to pursue “high-quality development” from “fast-speed development.”

Since 2016, the world’s largest steel maker has eliminated nearly 300 million tonnes of outdated steel production capacity and low-grade steel capacity, but around 908 million tonnes still remains.

Mr Yu Yong, the chairman of China Iron and Steel Association at an annual industry meeting said that “(China’s steel industry) is still far from accomplishing the supply-side reform task. (A) major campaign in 2019 will be optimising production structure, adjusting layout of steel mills and pushing merger and acquisition.”

But he also acknowledged that the pressure of oversupply from illegally-added capacity and new projects remains as mills try to cash in on high profit margins.

Mr Yu said that “Main source of China’s economic growth has turned to consumption from investment, which leads to fewer demand for steel products and higher requirement of products quality.”

The China Metallurgical Industry Planning and Research Institute, a government consultancy, predicted last month that steel consumption in the country would fall to 800 million tonnes in 2019 from 820 million tonnes in 2018, because of waning demand in the property, automobile and energy sectors.

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

Mr Yu also called on steel mills to prepare for further Sino-US trade friction and to pay close attention to the indirect impacts on Chinese steel exports.

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Posted By : Ratan Singh on Tue, 15 Jan 2019
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