Posted on 06 Aug 2014
China’s leading steelmaker has estimated national crude
steel output in 2013 at 822 million tonnes, nearly 6% above official data,
suggesting the country’s supply glut is worse than previously estimated.
The figure given in a speech published yesterday by Xu
Lejiang, chairman of the state-owned parent of Shanghai-listed Baosteel Corp,
would take the annual growth rate for steel output in 2013 from 7.5% to more
than 13%.
China’s steel sector, by far the world’s biggest, has been
plagued by a persistent oversupply that has depressed prices and saddled
hundreds of mills with colossal debts. Many are already on the brink of
closure.
“The harsh market situation has forced China’s steel
enterprises to experience firsthand the negative impact that overcapacity is
having on the healthy development of the steel industry,” Mr Xu told an
internal meeting of the China Iron and Steel Association (CISA) last week.
The government has stepped up efforts to crack down on the
bloated sector, restricting new capacity growth and forcing outdated and
polluting capacity to close, but new plants have continued to go into
operation.
According to a transcript of the speech published on CISA’s
website (www.chinaisa.org.cn), Xu said China’s official steel capacity levels
reached 1.106 billion tonnes last year, putting utilisation rates at 74.3%.
Total capacity has now risen to 1.14 billion tonnes, Xu
said.
He said CISA’s 88 members had a total capacity of 842.93
million tonnes last year, and produced 663.8 million tonnes of crude steel.
Smaller, non-member firms had a total capacity of 263.29
million tonnes and produced 158.17 million tonnes, putting their average
utilisation rate at just 60%.
Xu said Chinese steel mills would continue to struggle in
the second half of the year amid financing difficulties, rising environmental
compliance costs and higher tax rates.
“The age of rapid growth in the steel sector has already
come to an end and China will gradually see negative growth in steel
production,” he said.
China produced 412 million tonnes of steel in the first six
months of 2014, up 3 % on the official data, CISA said.
But with demand stagnant as a result of downturns in key
sectors like construction, apparent consumption rose just 0.4% to 376 million
tonnes.
