China serious in slashing steel capacity but excess production still coming down the road
Cutting capacity does not mean lower steel production for China
China is serious about cutting millions of tonnes of excess steel capacity but that will not mean lower production, particularly in the next few quarters, the head of the European Union steel body Eurofer said on Wednesday.
China pledged early last year to cut 150 million tonnes of excess capacity by 2020. The move, along with rising steel trade barriers and an infrastructure spending splurge by Beijing, helped global steel prices surge 45 per cent since December 2015.
But Chinese steel prices have slipped in recent weeks on concerns about a slowdown in construction and infrastructure projects.
“I think the Chinese government has a genuine goal of reducing capacity because they subsidise it, its costing them lots of money ... but cutting capacity doesn’t mean you cut production,” Eurofer president Geert Van Poelvoorde said.
“There will be in the next quarters more overproduction in China,” he told the European Steel Day conference in Brussels.
Output in China, which accounts for half of global steel production, rose 4.6 per cent in the first quarter to 201.1 million tonnes, after a 1.2 per cent increase to 808.4 million tonnes last year.