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Print[Ferro-Alloys.com] China´s steel sector after a decade of rapid growth need to prepare for a tight margins and weak demand in the next 3 to 5 years, including possible shut down of inefficient mills.
This warming comes after Baosteel’s comment over the price pressure for the rest of the year while there is a chronic excess capacity in the country.
Chairman of Nanjing Iron & Steel Group, Yang Siming, said that the next 3 to 5 years will be a severe winter for Chinese steel industry and there will be a significant change since the surplus is too big but no one wants to cut down the production.
He said total capacity of steel in China is now close to 1 billion tons but the demand is about 700 million, he wondered what should do with the 300 million tons for balance. Weak demand and big stock let China steel futures to a record low in last week and also push the iron ore price to lowest point in last 3 years.
Moreover, most of the steelmakers are controlled by the government, it seems unlikely to turn off the blast furnaces and cut the jobs.
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