China’s ‘mini-stimulus’ efforts unlikely to lift steel prices: CISA
BEIJING (Reuters): A series of “mini-stimulus” policies designed to rejuvenate China’s flagging economy will help support steel demand over the coming months, but prices will continue to be weighed down by a supply glut, the country’s steel association said.
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A labourer looks at steel coils next to a production line of Dongbei Special Steel Group Co., Ltd., in Dalian, Liaoning province – Reuters |
China’s economy grew at an annual rate of 7.5% in the second quarter, up slightly from 7.4% in the first three months of the year, responding to a modest stimulus package that included tax cuts for small firms, reserve requirement cuts for some banks and infrastructure spending.
New housing construction helped drive an improvement in steel demand in June, and inventory levels declined 5.65% declined from the end of May, but prices still remained near 11-year lows, the China Iron and Steel Association (CISA) said.
“Steel production remains at a high level, which isn’t conducive to easing the oversupply problems in the steel market, and it will be difficult for steel product prices to see any large-scale recovery,” it said in its monthly market report.
China’s steel sector has been plagued by overcapacity, and industry officials have expressed hope that weakening demand and higher environmental compliance costs will help winnow out smaller, inefficient producers.
The local government of the major producing region of Hebei near Beijing is also planning to shut as much as 60 million tons of ageing, polluting steel capacity by 2017.
Industry estimates suggest China’s total steel capacity stands at more than 1 billion tons, compared to an annual production rate of 779 million tons in 2013.
China’s June daily steel output at new highBEIJING (Reuters): China’s daily crude steel output rose 1.8% in June to hit a record 2.31 million tons, defying any seasonal downturn in demand, data from the statistics bureau showed last week. |
