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China Reduces Its Ability to Make Steel, But Not Its Desire
05/16/2017 - China is more than halfway to achieving its goal of cutting 50 million metric tons of crude steel capacity this year, according to Xinhua, the country’s official news agency.
As of last week, the country had eliminated 31.7 million tons of capacity, Xinhua reported. However, eliminating redundant capacity is an uphill battle, it said.
“The enthusiasm for the drive is waning with rising demand for steel and coal, difficulty in relocating former employees and digesting the debt,” the agency reported.
And, indeed, better steel prices appear to be too-good-to-resist for producers – they set a new one-month production record in April, making 72.78 million metric tons of steel, according to the Reuters news agency.
"Driven by high profits, steel companies are raising their capacity by using high-quality iron ore and increasing their use of steel scrap," Bai Jing, an analyst at Galaxy Futures, told Reuters.
“The enthusiasm for the drive is waning with rising demand for steel and coal, difficulty in relocating former employees and digesting the debt,” the agency reported.
And, indeed, better steel prices appear to be too-good-to-resist for producers – they set a new one-month production record in April, making 72.78 million metric tons of steel, according to the Reuters news agency.
"Driven by high profits, steel companies are raising their capacity by using high-quality iron ore and increasing their use of steel scrap," Bai Jing, an analyst at Galaxy Futures, told Reuters.
