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Chinese Steel Sector to Face Oversupply as 80 Million Tonne Capacity Comes in 2020

Steel News - Published on Fri, 07 Aug 2020

Image Source: Chinese Steel Sector Oversupply
China News reported that China Metallurgical Industry Planning and Research Institute’s chief engineer Mr Li Xinchuang rsaid that oversupply concerns weigh heavily on the steel sector in China as some 80 million tonnes of fresh capacity will hit the market this year amid dwindling demand due to the COVID-19 epidemic. He told “New capacity was primarily a result of the capacity replacement program that was outlined by the Ministry of Industry and Information Technology with aim to help steel companies shed outdated capacity and give permission to those companies for new capacity at certain levels. New steel capacity released in a relatively short time will have a great impact on the market, especially as the COVID-19 epidemic crimped demand in both domestic and foreign markets. The steel industry is likely to witness a serious oversupply situation again.”

He added "If steel companies' production exceeds market demand, destocking will be difficult to accomplish. High inventories may become the norm in the steel market this year. At the same time, high inventories will cause fund erosions and impact total turnover."

Mr Li said crude steel production is likely to cross 1 billion tonnes this year in the country and steel production is likely to account for over 56 percent of the global output this year.

According to data released by the National Development and Reform Commission, China produced 499 million tonnnes of crude steel during the first six months of this year, up 1.4 percent on a yearly basis.

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Posted By : Yogender Pancholi on Fri, 07 Aug 2020
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