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Oversupply concerns pose hefty problems for steel manufacturers

2020-08-10    Author:   Views:287    

steel manufacturer .jpg

An employee checks the size of steel billets at a steel plant in Dalian, Liaoning province. [WANG YANG/FOR CHINA DAILY]

Oversupply concerns weigh heavily on the steel sector in China as some 80 million metric tons of fresh capacity will hit the market this year amid dwindling demand due to the COVID-19 epidemic, an industry expert said.

Li Xinchuang, chief engineer of China Metallurgical Industry Planning and Research Institute, an industry research and consultancy platform under the State-owned Assets Supervision and Administration Commission of the State Council, said at a recent industry forum that the new capacity was primarily a result of the "capacity replacement" program that was outlined by the Ministry of Industry and Information Technology. The aim is to help steel companies shed outdated capacity and give permission to those companies for new capacity at certain levels.

According to data released by the National Development and Reform Commission, China produced 499 million tons of crude steel during the first six months of this year, up 1.4 percent on a yearly basis.

Li said crude steel production is likely to cross 1 billion tons this year in the country and steel production is likely to account for over 56 percent of the global output this year.

"New steel capacity released in a relatively short time will have a great impact on the market, especially as the COVID-19 epidemic crimped demand in both domestic and foreign markets. The steel industry is likely to witness a serious oversupply situation again," Li said.

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