China: Steel profits, prices rise on excess cut
China’s steel industry posted higher prices and better profits last year as a result of progress made in reducing excessive capacity, the Ministry of Industry and Information Technology said.
The steel price index was 121.8 at the end of December, up 22.4 percent from the beginning of 2017, the ministry said.
It attributed the increase to cutting overcapacity, a ban on low-quality steel, production restrictions during winter, and recovering market demand.
China slashed its crude steel production capacity by more than 50 million tons in 2017, exceeding its annual target, as part of efforts to improve the competitiveness of the bloated sector.
China also phased out the production of 140 million tons of low-quality steel made from scrap metal last year.
The industry’s profitability improved, with major steel producers’ profits surging 613.6 percent, the ministry cited data from the China Iron and Steel Association as saying. Despite the improvement, the ministry warned of more difficulties in further capacity reduction as the increased profits may lure some producers to launch new projects.
China plans to cut 100 million to 150 million tons of crude steel capacity in five years from 2016.