The year 2015 proved to be the worst year for global steel industry, with China being the most badly affected country. The Chinese steel industry suffered due to sluggish demand, steel mills overcapacity, cheap exports resulting in huge losses to the steelmakers there.
As reported, CISA (China Iron & Steel Association) expects the crude steel output of China for year 2015 will stand at around 803 MnT which is 2.31% less than the steel output of year 2014.
Mills in China are confronting their first shrinkage in a generation leading to significant fall in both raw material and finish steel prices.
The statistics shows that its member steelmakers reported a loss of RMB 14.16 billion (USD 2.21 billion) in Nov’15 against RMB 10.5 billion ( USD 1.60 billion) in Oct’15 and RMB 100 billion (USD 1.52 billion) in Sep’15.
In order to control losses, Chinese mills are forced to cut or halt production and CISA is reportedly considering setting up a fund to encourage the exit.
However 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.
*CY15 is estimated production
Source: World Steel Association
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