Chinese Steel sector makes headway in capacity reduction

China’s steel sector made considerable progress in the reduction and elimination of excess industrial capacity during the first six months of the year, while its ongoing efforts to curb pollution continued to bear fruit, experts said.

During the first six months of this year, the nation produced 373 million metric tons of iron, 451 million tons of crude steel and 5.31 million tons of finished steel, up 0.5 percent, 6 percent, and 6 percent respectively on an annualized basis, according to data published by the China Iron and Steel Association (CISA) on July 25.

The association’s China Steel Price Index, which tracks the price movement of the commodity in China, stood at 115.8 by the end of June, a 14.6 percent year-on-year growth.

CISA said that during the six month period, its members saw sales revenue surge by 15.33 percent year-on-year to 1.97 trillion yuan ($290.6 billion), while net profit rose 151.5 percent to 139.3 billion yuan.

The industry has also been able to lower the overall debt levels. By the end of June, the debt-to-asset ratio of the CISA members was 67.3 percent, a year-on-year drop of 3.9 percentage points. Net receivables decreased by 7.68 percent from last year, while the net accounts payable dropped 6.51 percent year-on-year.

Yu Yong, chairman of the association, credited the sound performance of the industry so far this year to the country’s continuous efforts and achievements in removing overcapacity and crackdown on inferior-quality steel products.

‘Elimination of outdated capacity has helped boost the overall quality of steel produced and helped balance the market demand and supply,’ Yu said, adding that the oversupply problem in the industry has almost been solved.

Source: The Central People’s Government of the People’s Republic of China