Speaking at the SteelOrbis 2017 Spring Conference & 76th IREPAS Meeting held in Budapest on March 26-28, Simon Yu, vice president of the Chinese steelmaker Jiangsu Yonggang Group, said that in 2017 China is targeting the elimination of 50 million mt of inefficient steel capacity, while eliminating the output of low-quality steel produced by medium-frequency melting furnaces using scrap before the end of June this year. He also recalled China’s plans to reduce its crude steel capacity by between 100 million mt and 150 million mt and its coal mining capacity by 500 million mt in addition to a further 500 million mt through mergers and reorganizations of coal enterprises in the five years starting from 2016. Mr. Yu emphasized that in 2016 China has already eliminated more than 65 million mt of inefficient steel capacity and more than 290 million mt of coal mining capacity.
According to the Yonggang official, steel prices in the Chinese market declined continuously in 2015 owing to various factors such as excess capacity and reduced demand, while in 2016 China’s steel prices began to rebound, mainly in two periods, namely, March to April and October to December, and they moved up further in early 2017. He went on to say that Chinese exports decreased by 3.96 million mt or 3.48 percent year on year to 108.49 million mt in 2016 after six consecutive years of growth. Among the reasons for the decline in Chinese exports, Mr. Yu included the slowdown of global economic growth, the continuous increase in international trade protectionism, the rebound in Chinese steel prices as of 2016, and the gradual weakening of the competitiveness of Chinese export prices. He added that Chinese steel exports will see a significant decrease this year, especially in long products.
Regarding the outlook for the Chinese economy, Mr. Yu stated that China has set its GDP growth target for 2017 at around 6.5 percent and will try to achieve an even better result, thereby laying a solid foundation for the development of China’s steel industry this year. Additionally, in 2017, as estimated by the China Iron and Steel Association (CISA), China’s automobile industry will keep growing, the growth of its real estate industry may slow down a little bit, but the investment in infrastructure construction will be a bright spot. China’s domestic steel demand will remain stable in 2017, he said.