Coal, steel targets within reach
Prices jump, profitability improves for many producers
China had completed more than 80 percent of this year’s capacity reduction targets for coal and steel as of September 30, a development that experts said showed the government’s goals for capacity cuts this year are within reach.
But experts also warned that pressures facing these industries persist, as competition has intensified and producers may scale back production to reap the benefits of any price surge.
The Chinese government’s move to cut capacity has yielded positive results, with market order returning and revenues for steel and coal producers improving, Huang Libin, an official from the Ministry of Industry and Information Technology, told a press briefing on Thursday.
There have been price surges for coal and steel in the domestic market, with gains of about 30 percent and 50 percent, respectively, compared with the beginning of 2016, according to a statement on the website of the State Council, China’s cabinet, on Thursday.
China’s major steel and coal producers are also seeing a profit turnaround, said the statement. Members of the China Iron and Steel Association made a profit in the first eight months of this year, compared with a net loss a year earlier. Miners’ profits grew in August after contracting for the first seven months of this year.
As of the end of July, the country had only met 47 percent and 38 percent of its annual targets for capacity cuts in the steel and coal sectors, respectively, according to a statement on the website of the National Development and Reform Commission ( NDRC). As of that point, these figures were still far