The China Iron and Steel Association (CISA) has stated during its executive council meeting held on July 25 in Beijing that demand and supply in the Chinese steel industry have been balanced in the first half of the current year, with the overall gross profit of the steel industry up 151.15 percent year on year in the given period.
According to CISA, in the first half of the year China’s pig iron, crude steel and finished steel outputs amounted to 373 million mt, 451 million mt and 531 million mt, up 0.5 percent, 6.0 percent and 6.0 percent year on year. Meanwhile, as of the end of June (June 30) the composite steel price index (CSPI) for the Chinese domestic market was at 115.80 points, up 1.51 points or 1.32 percent month on month, while increasing by 14.77 points or 14.62 percent on year-on-year basis and decreasing by 4.9 percent compared to the end of 2017.
Yu Yong, CISA president, stated the main reason for the big rise in crude steel output was that high quality capacity could be effectively released following the elimination of low grade construction steel capacity. Against the background of the simultaneously rising of volumes and prices, the steel industry’s performance has improved, he said. In the first half of the year, the large and medium-sized steel enterprises in China - all CISA members registered an overall sales revenue of RMB 1.97 trillion ($0.27 trillion), up 15.33 percent, achieving a gross profit of RMB 139.2 billion ($20.6 billion), rising by 151.15 percent, both year on year.
Mr. Yu stated that demand and supply have recovered to a basically balanced situation, resulting in normal fluctuations in steel prices, indicating that the steel industry’s capacity elimination has made great progress.
However, Luo Tiejun, an inspector at China's Ministry of Industry and Information Technology, stated that, although the steel industry has made great progress in capacity elimination, some steelmakers have failed to meet the requirements stipulated by China's capacity replacement policy as they have been seeking to expand their production capacity against the backdrop of good profitability in the steel industry. Accordingly, Mr Luo required steelmakers to strictly implement the capacity replacement requirements.