China’s 2017 steel out­put to rise de­spite mill clo­sures

Global Times US Edition - - BIZMARKETS -

China’s steel out­put is ex­pected to grow 3 per­cent to 5 per­cent in 2017 com­pared with last year, said a trade body of­fi­cial on Satur­day, de­spite the clo­sure of small out­dated mills as surg­ing prices prompted larger play­ers to churn out more metal.

The world’s largest steel pro­ducer will make about 840 mil­lion tons of crude steel this year, said Qu Xi­uli, vice pres­i­dent at China Iron and Steel As­so­ci­a­tion (CISA).

Last year, the coun­try pro­duced 808 mil­lion tons of steel.

Steel out­put at mem­ber steel firms of the as­so­ci­a­tion – each with an an­nual ca­pac­ity of more than 1 mil­lion tons – rose 6.8 per­cent in the first seven months of this year, while small steel mills saw a 2 per­cent drop in pro­duc­tion from last year.

That comes af­ter the cen­tral gov­ern­ment’s crack­down that shut down 120 mil­lion tons of low-tech steel ca­pac­ity in the first half of this year and a con­tin­u­ing se­ries of en­vi­ron­men­tal in­spec­tions in an ef­fort to curb pol­lu­tion.

“The Chi­nese steel sec­tor is up­grad­ing and the in­dus­try con­cen­tra­tion ra­tio is ris­ing,” said Qu.

Of the 808 mil­lion tons of steel pro­duced last year, only about 36 per­cent was pro­duced by the top 10 largest steel mills in the world’s sec­ond­largest econ­omy, and their por­tion is ex­pected to in­crease this year.

China has been striv­ing to stream­line its heavy in­dus­tries to re­duce debt bur­dens and pro­duce more high value prod­ucts.

Ex­port prices for steel prod­ucts in the first seven months of the year rose 43.3 per­cent to $686 a ton com­pared to the same pe­riod last year, ac­cord­ing to CISA.

Shang­hai bench­mark steel re­bar prices gained nearly 50 per­cent this year, hit­ting a peak in four and a half years at 4,194 yuan ($640.31) a ton in early Septem­ber, as the mar­ket was boosted by ex­pec­ta­tions of tight sup­ply due to rig­or­ous ca­pac­ity cut­backs and the en­vi­ron­men­tal checks.

The price in­creases have led to boom­ing prof­its at Chi­nese steel mills.

“The net prof­its of Chi­nese steel firms have raised 390 per­cent in the first seven months of this year to over 70 bil­lion yuan. We ex­pect to see at least 100 bil­lion yuan in prof­its by the end of this year,” said Qu.

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