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China to focus on improving steel capacity structure

China to focus on improving steel capacity structure
Issue Time:2019-03-08

China to focus on improving steel capacity structure

BEIJING, Jan 14 (Reuters) - China’s steelindustry will shift its focus to optimising capacity structure, includingproducts, location and ownership, in 2019, from reducing overall capacity, saidan executive of the country’s iron and steel association on Monday.

China is entering the fourth year of itssupply-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Since 2016, the world’s largest steel makerhas eliminated nearly 300 million tonnes of outdated steel production capacityand low-grade steel capacity, but around 908 million tonnes still remains.


(China’s steel industry) is still far from accomplishing thesupply-side reform task,” said Yu Yong, the chairman of China Iron and SteelAssociation at an annual industry meeting. “(A) major campaign in 2019 will beoptimising production structure, adjusting layout of steel mills and pushingmerger and acquisition.”


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


Main source of China’s economic growth has turned to consumptionfrom investment, which leads to fewer demand for steel products and higherrequirement of products quality,” said Yu.

The China Metallurgical Industry Planningand Research Institute, a government consultancy, predicted last month thatsteel consumption in the country would fall to 800 million tonnes in 2019 from820 million tonnes in 2018, because of waning demand in the property,automobile and energy sectors.


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



Yu also called on steel mills to preparefor further Sino-U.S. trade friction and to pay close attention to the indirectimpacts on Chinese steel exports.


Total steel exports fell to 69.54 milliontonnes last year, the lowest since 2013, data from the General Administrationof Customs showed on Monday.