CISA: China eliminates 155 million mt of steel capacity in 2016-18

Thursday, 28 March 2019 17:08:03 (GMT+3)   |   Shanghai

Chi Jingdong, vice chairman of the China Iron and Steel Association (CISA), has stated at the 17th International Steel Market and Trade Conference held on March 28 in Nanjing that China eliminated 155 million mt of steel capacity in the 2016-18 period, while it shut down around 140 million mt of induction furnace-based low-quality steel capacity in the same period.

As the CISA indicated, there were 200 million mt of new steel capacity projects in 2018 via capacity replacement. Following the capacity replacement, the new capacities will enter the market, which will exert a negative impact on steel prices.

Meanwhile, the CISA also said in 2019 downstream industries, including infrastructure, shipbuilding and some machinery industries, will register growth compared to 2018, thereby providing support for finished steel demand. However, some industries, including real estate, certain other machinery industries and the home appliance sector, will see a slowdown in growth, while the automobile industry will likely register negative growth, all of which will negatively impact demand for finished steel.

Nevertheless, in the January-February period of the current year, China’s real estate investments rose by 11.6 percent, following a year-on-year rise of 9.5 percent in 2018, indicating that the development of new projects will continue to provide solid support for finished steel demand.

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