China's capacity investments a threat for steel industry

Wednesday, 24 August 2005 15:09:09 (GMT+3)   |  
       

China’s capacity investments a threat for steel industry

The new capacity investments of China's highly scattered steel industry are expected to push the country's steel production capacity to close to half a billion metric tons by the end of 2006. A survey of 474 steel mills carried out by the China Iron & Steel Association (CISA) suggests that the domestic steel production capacity of China will increase to 490 million metric tons by the end of next year. The report indicates that the production capacity of China was 420 million metric tons in 2004. China produced 300 million metric tons last year, representing a 72 percent utilization rate. The new figures raised concerns about the future of China's domestic steel industry. Analysts will almost certainly revise their forecasts on future steel prices downwards in light of the news. Since September 2004, China has, for the most part, been a net steel exporter; only this past July did imports exceed exports. According to CISA, China's steel demand grew at a rate of 10 percent per annum during the first quarter of 2005, but the growth rate increased to 20 percent in the last four months. This sudden spurt can only be explained by the strong growth in manufacturing sector. However, Beijing sees the rapidly increasing capacity as a threat. The government it trying to combat such expansion by encouraging mergers in the steel industry.

Similar articles

Turkish stainless steel sector remains sluggish

16 Sep | Flats and Slab

Baosteel to gradually phase out rebar production

24 Apr | Steel News

China's stainless steel capacity increase may slowdown

13 Sep | Steel News

Ukrainian steel industry modernization picks up speed

30 Jul | Steel Matters

Emerging importance of Indian steel market

27 Feb | Steel Matters

China to boost up its machine equipment sector

03 Jan | Steel News

What is the current direction of the stainless steel market?

18 Sep | Flats and Slab

‘Coke price to remain high’

30 Mar | Steel News

China gives most important impulses according to IISI

08 Oct | Steel Matters

China's industrial output up 19.4% in March

09 Apr | Steel Matters