CONF: Slight gain tipped for China’s steel output in ‘19
The slight uptick in steel output will mainly result from new productive capacity scheduled to come online this year, such as Lu’an Steel Holding in Central China’s Anhui province, the Rizhao steelworks of Shandong Iron & Steel Group Co in East China’s Shandong province, and Fengnan Iron & Steel Co of Hebei Zongheng Group in North China’s Hebei province. The total capacity to be commissioned this year is estimated at around 20 million tonnes/year, according to Xu.
Such new capacity will be brought online through China’s capacity swap program, which means that the commissioning of these new facilities will definitely be accompanied by the demolition of old capacity of at least the same volume. However, “part of the new capacity, once commissioned, will surely contribute additional steel output as the old capacity it replaced may not actually have been in operation,” Chi Jingdong, vice chairman of China Iron and Steel Association, pointed out at the Thursday conference.
Besides, steel capacity in debt-ridden steel mills – whose operations have long been halted through bankruptcy – will return to market after the enterprises are rescued and will contribute to 2019 crude steel production, according to Xu. Such capacity includes 18 million t/y belonging to Bohai Steel Group Co in North China’s Tianjin municipality and 4 million t/y of Xilin Iron & Steel Group in Northeast China’s Heilongjiang province, he observed.
Many other presenters of the conference agreed that crude steel output will move up in 2019, Mysteel notes.
“The capacity utilization rate of Chinese steelmakers has not exceeded 80%, which means that there is still room for increases,” Li Xinliang, vice president of Nanjing Iron & Steel Group International Trade Co commented during a discussion session at the conference on Thursday.
His view was echoed by his peer, Sun Fei, president of Jiangsu Shagang International Trade Co. “No steelmaker will be willing to reduce production as long as it can still make money,” Sun stated. “Although Chinese steel industry profits are predicted to decline this year, the motivation to ramp up production or produce in full swing is still there,” he added.
Over January-February, China’s crude steel production reached 149.6 million tonnes, up 9.2% on year, according to data compiled by China’s National Bureau of Statistics. Steel output in January-February is usually at a low level compared with other months of the year, mainly due to festive factors, as well as China’s restrictions on steelmakers in certain regions during the winter, Xu pointed out on the conference sidelines.
Written by Olivia Zhang, zhangwd@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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