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July 12, 2017

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Steel overcapacity cut ahead of target

CHINA has fulfilled the year’s task of cutting steel capacity over the first six months, boosting the nation’s industrial upgrading, the state-asset regulator said yesterday.

The nation has reduced steel overcapacity by 5.95 million tons during the first half year, “finishing the year’s task ahead of schedule,” said Shen Ying, chief accountant of the State-Owned Assets Supervision and Administration Commission.

The measure reflects the country’s commitment to industrial upgrading – enhancing industries’ competitiveness by cutting oversupply and adding advanced technologies, Shen said.

China’s efforts to reduce capacity since the end of 2015 have boosted prices of steel and the profits of steel makers.

Rebar was priced at 3,759 yuan (US$553) per ton by the end of June, 15 percent higher than at the start of the year, according to the China Iron and Steel Industry Association. Steel makers can make profits around 1,000 yuan by selling a ton of rebar, “a high level compared with the past several years,” said Wang Guoqing, research director at, a domestic steel consultancy.

While the capacity cut targeted low-efficiency companies or those producing low-quality steel, advanced steel makers accelerated production.

The industry association’s member enterprises, selected as model companies with advanced technologies and equipment, increased daily crude steel production to a record 1.86 million tons by mid-June, said analyst Ma Li.

China has also lowered coal capacity by 6.59 million tons and reorganized coal plants with capacity totaling 13 million tons over the first half year, “which are solid demonstrations of China’s efforts to help balance supply-demand relations for more competitive industries,” Shen said.


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