Posted on 26 Jul 2013
China faced a severe overcapacity in its sprawling steel sector in the first half of the year, despite the government's best efforts to rein it in.
In the first six months of 2013, the output of crude steel remained at 390 million tonnes, up 7.4 per cent year-on-year, with an average daily production of 2.15 million tonnes, Xinhua news agency quoted the chief engineer of the Ministry of Industry and Information Technology (MIIT), Zhu Hongren, as saying.
As of June 30 this year, the price index produced by the China Iron and Steel Association (CISA) dropped 3.3 per cent on a monthly basis to 98.5 points, down 14.7 per cent from a year ago, due to the continuing slide in the steel price.
The CISA's data also showed the rising risks of insufficient capital in the sector.
It said from January to May, the debt-to-asset ratio of key Chinese steel firms stood at 69.4 per cent, reflecting financing difficulty.
Meanwhile, due to stricter energy saving and emission standards concerning particulate matter and sulphur dioxide, some steel enterprises are required to invest more on reducing pollution.
Zhu said the Chinese government would push adjustment and upgrades to the steel industry and support energy saving, so as to ease overcapacity, and ensure a steady development of the sector in the second half of the year.
