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China vows to consolidate fragmented steel industry -The 18th China(Guangzhou)Int'l Stainless Steel Industry Exhibition
12/27/2016 Stainless Steel Exhibition |
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Mr Chi Jingdong deputy director of China Iron & Steel Association said that "The highly fragmented steel industry in China caused cut-throat competitions. to solve the problem, China vowed to enhance its steel industrial concentration rate from current 34% to at least 60% in the coming five years.”
Mr Chi underlined that China’s crude steel capacity utilization rate has declined from 79% in 2010 to around 70% in 2015, showing the deterioration of the overcapacity problem. He said that “China’s steel overcapacity has translated from regional, structural supply glut to absolute oversupply.”
China’s steel capacity has aggregated to around 1.13 billion tonnes by the end of the 12th five-year period, and large and medium-sized steel companies’ liability ratio has surpassed 70%. Against this backdrop, Beijing made firm determination to consolidate its scrapped steel industry in the following five years through either industrial merger and acquisitions or plant closure.
This year, as a starting point, 72.71 million tonnes of steel capacity has been eliminated in 26 provinces, and some provincial government has finished the elimination task over the whole 5-year period.
However, it is pointed out that, about 73.5% of the eliminated capacities were those dead facilities that have been idled for years, and only 21% of the removed part was swept offline. Even, of the 21%, some were just restarted this year before stopped again, an analyst disclosed to the reporter.
The source further mentioned that “14 provinces just removed the already closed steel plants to answer Beijing’s call, and only a handful of provinces like Hebei, Jiangsu, Shandong and He’nan cut capacities in real sense. The proportion of dead facilities took up no more than 50% in these four provinces.”
That is also why insiders generally believed the capacity cut task next year would be much tougher and more pains-taking next year than this year.
China’s steel products make up for nearly one half of global supply, yet the top 10 steelmakers in the country only produce 34.23% of steel products, much lower than the level of over 60% in developed economies worldwide.
-The 18th China(Guangzhou)Int''l Stainless Steel Industry Exhibition
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