China's steel industry urged to continue downsizing

Updated 2017-04-25 09:31:15 Xinhua

A senior figure in the Chinese steel industry has called for further cuts to steel capacity, saying the sector remains saturated, despite increased profits and production of steel mills in the first quarter.

"The whole industry needs to press ahead with cutting capacity and de-leveraging," said Gu Jianguo, executive vice chairman of the China Iron and Steel Association (CISA).

He warned against steel price volatility and falling exports in an article published Monday on the CISA website.

Gu's remarks came after unexpectedly strong performance in the steel sector this year.

Thanks to recovery in the broader economy, CISA's members posted combined profits of 23.3 billion yuan (3.4 billion U.S. dollars) during the January-March period, in contrast with a 8.75 billion yuan of losses a year ago.

China's total crude steel output in the same time rose 4.6 percent year on year, with daily production in March hitting a record high.

Encouraged by the the unexpected good news, unfounded optimism is blooming in the oversupplied sector, which Gu describes as "near-sighted."

Highlighting lingering problems, Gu said "more observation is necessary" to forecast the full-year economic outlook, and steel demand and consumption.

Plant managers should be clear-headed, Gu said, asking them not to "blindly increase production."

Officials in a high-level meeting last month agreed steel capacity has not changed fundamentally and the recent price rally could result in vulnerabilities. Capacity cuts are still necessary this year.

Steel production capacity should be cut by around 50 million tonnes and coal by at least 150 million tonnes this year, a key part of supply-side structural reform.

Gu called on steel plants to cooperate with government to eliminate inferior steel products, shut down "zombie enterprises" and curb new capacity.

Also in the News

Nicole Kidman Recalls Oscar Glory: Loneliest Time
Showbiz2016/06/16 13:58March 22 2018 04:43:45

Nicole Kidman Recalls Oscar Glory: Loneliest Time

Attending Shanghai International Film Festival, Nicole Kidman talks about her role in "Grace of Monaco".

Labor Day Travel Peak Starts
Also in the News2014/05/01 12:16March 22 2018 04:43:45

Labor Day Travel Peak Starts

Johnny Depp Delivers a Speech 'Evolve the Future' in 'Transcendence'
Also in the News2014/04/18 13:18March 22 2018 04:43:45

Johnny Depp Delivers a Speech 'Evolve the Future' in 'Transcendence'

Hollywood star Johnny Depp's speech in the upcoming new film "Transcendence" has been disclosed on Friday, April 11th.

Most Watched

China World Business Sports Showbiz Audio
C4 My Chinese Life The Sound Stage China Revealed Showbiz Video Travel Video
China World Fun Travel Entertainment Sports
Beijing Shanghai Guangzhou
Live Music Opera & Classical Movies Traditional Shows Exhibitions
Learn Chinese:
Chinese Studio Living Chinese Everyday Chinese Just For Fun Chinese Culture Buzzwords