According to Baosteel Corp, the age of rapid growth in steel sector has come to an end in China. The country is most likely to witness negative growth in steel production in the years to come.
The steelmaker also estimated the steel output by the country at 6% higher than the official estimates. The firm stated that the Chinese national crude steel output touched 822 million tonnes in 2013. The CISA’s 88 member mills accounted for 663.8 million tonnes of crude steel output, whereas non-member mills produced 158.17 million tonnes. The capacity utilization by CISA member mills stood at 78%. On the other hand, non-member mills reported a lower average capacity utilization rate of 60% during the year.
Baosteel noted that although the administration has gone ahead with more stringent measures to close down outdated and polluting steelmaking capacities, new plants have continued to go into operation.
The Chinese steel firms are likely to struggle hard during the second half of the year. The expenditure towards environmental compliance and rising tax may dampen the steel industry. Moreover, the demand growth is expected to remain stagnant during the period. According to latest CISA data, downturns in the construction sector have limited the country’s apparent steel consumption to 376 million tonnes during the first half of the year 2014, more or less flat when compared with a year ago.