China's Steel Production Contracts for the First Time in 25 Years
01/19/2016 - For the first time in as long as many can remember, Chinese steelmakers produced less than they did the year before, according to reports.
Citing data from China’s statistics bureau, the BloombergBusiness news service reported that China’s annual crude steel production declined 2.3 percent to 803.8 million metric tons in 2015. It’s the first time the industry has had year-over-year contraction in production since 1991, Bloomberg said.
“This marks the start of declining steel output in China as the economy slows,” Xu Huimin, an analyst at Huatai Great Wall Futures Co. in Shanghai, told the news service. “We’re likely to see more output cuts this year, though the magnitude of declines will be quite similar to 2015. Supply cuts in a glut are a long-drawn process as mills seek to maintain market share.”
The news service also said China’s domestic steel demand is declining, prompting steelmakers to export record amounts, much to the dismay of producers elsewhere on the globe.
That’s especially so for ArcelorMittal, the world’s largest steelmaker, which has lost nearly all of its peak value, largely due to the flood of imports, Bloomberg said.
In 2008, during the height of a commodities pricing boom, ArcelorMittal had a market capitalization of approximately US$140 billion. Since then, 95 percent of that value has bled off.
“The global steel industry is in a world of pain. Unfortunately, the situation is simply so bad, an overnight cure is nigh on impossible,” financial services firm Macquarie Group Ltd. said in a note to investors, Bloomberg said.
“This marks the start of declining steel output in China as the economy slows,” Xu Huimin, an analyst at Huatai Great Wall Futures Co. in Shanghai, told the news service. “We’re likely to see more output cuts this year, though the magnitude of declines will be quite similar to 2015. Supply cuts in a glut are a long-drawn process as mills seek to maintain market share.”
The news service also said China’s domestic steel demand is declining, prompting steelmakers to export record amounts, much to the dismay of producers elsewhere on the globe.
That’s especially so for ArcelorMittal, the world’s largest steelmaker, which has lost nearly all of its peak value, largely due to the flood of imports, Bloomberg said.
In 2008, during the height of a commodities pricing boom, ArcelorMittal had a market capitalization of approximately US$140 billion. Since then, 95 percent of that value has bled off.
“The global steel industry is in a world of pain. Unfortunately, the situation is simply so bad, an overnight cure is nigh on impossible,” financial services firm Macquarie Group Ltd. said in a note to investors, Bloomberg said.
