Mills in China are confronting first shrinkage in a generation leading to overcapacity and significant fall in both raw material and finish steel prices.
With falling steel prices and increasing losses due to sluggish demand, world’s largest steel producer, China is anticipated to pour less metal in the coming months.
Some steelmakers are waiting help from government and fiscal policies. Even banks are unable to easily cut loan and credit because they wish to avoid sink of loan. In this situation, large steel mills that could not gain profit are still able to survive in the market.
However small steel mills are failing to bear the cost burden and mounting losses resulting in their closure. It was reported in Nov’ 15 that Chinese mills having total capacity of 50 MnT announced their closure since January.
According to China Iron & Steel Association (CISA) although China’s daily crude steel output of key steel makers ascended by 0.4% in early November, a fall 2.1% was reported in mid November with daily crude steel output averaging around 1.69 MnT and procurement sources are expecting further output cuts.
Crude steel production in China was 66.12 MnT in Oct’15, 3.1% lower than the same month last year while total crude steel output between Jan’15-Oct’15 was 675 MnT, down 2.2% Y-o-Y basis.
*Crude steel output for Nov is from 1-20th Nov
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