BEIJING: Apparent steel consumption in China, the world’s biggest producer and consumer, fell 5.7 percent to 590.47 million tons in the first 10 months of the year, the China Iron and Steel Association said yesterday.
China’s massive steel industry has been hit by weakening demand and a huge 400-million-ton-per-annum capacity surplus that has sapped prices.
“The market will only achieve balance if uncompetitive enterprises with no market demand are allowed to die,” CISA Vice Secretary-General Wang Yingsheng told a conference.
Zhang Dianbo, vice president of Baoshan Iron and Steel Corp told the conference that the capacity utilization rate of China’s steel industry now stood at 69.3 percent, down from 70.69 percent in 2014, despite efforts to curb new projects and close old and polluting mills.
Capacity utilization rates are measured by dividing output by capacity. Rates in the steel sectors of other countries are 90 percent.
China aims to raise the rate to above 80 percent by 2017, according to a policy document published by the industry ministry earlier this year.
“It is hard to answer how long it will take for China to reduce capacity, but we believe it won’t be completed in a short time,” said Zhang.
China said earlier in the year that it will aim to cut as much as 80 million tons of excess steel capacity in the next three years.
Producers have relied on export markets to offset the decline in domestic demand, but crude steel output still fell 2.2 percent in the first 10 months of the year, according to official data.
