Officials in China looking to eliminate up to 45 million tpy of crude steel capacity in 2016

A news report published by Metal Bulletin yesterday spoke of officials in China looking to eliminate up to 45 million tpy of crude steel capacity in 2016 as part of its efforts to address overcapacity.


This is significant news since the issue of Chinese steel overcapacity is often cited as being the prime cause for the current downtrend trend in global steel prices, fully in line with our expectations and forecasts published in our latest edition of "Global Steelmaking Production, Capacity and Capex: A Five Year Market Outlook" - click here to see a full sample of this study/database service.

In reaction to this, I have some personal thoughts I'd like to share with you in this post.

a) Despite best intentions, I do not think that these announced targets for cuts in capacity in 2016 and 2017 are going to be fully realized in reality. Any seasoned observer of the Chinese steel industry could tell you the level of skepticism there is for capacity cut announcements based on historic precedence.


b) Even if they did, significant overcapacity will still...

Published

Brian Levich

June 30, 2016

00:00 GMT