China's steel output is expected to grow by three to five percent in 2017. (Photo provided to CGTN)
China's steel output is expected to grow by three to five percent in 2017 compared with last year, a trade body official said on Saturday, despite the closure of small outdated plants as surging prices prompted larger players to turn out more metal.
The world's largest steel producer will make around 840 million tonnes of crude steel this year, said Qu Xiuli, vice president of the China Iron and Steel Association (CISA).
Last year, the country produced 808 million tonnes of steel.
Steel output at member steel firms of the association, each with an annual capacity of more than one million tonnes, rose by 6.8% in the first seven months of 2017, while small steel mills saw a 2% drop in production from last year.
It comes after a crackdown by Beijing that shut 120 million tonnes of low-tech steel capacity in the first half of this year and a continuing series of environmental inspections in an effort to curb pollution.
"The Chinese steel sector is upgrading and the industry concentration ratio is rising," said Qu.
Of the 808 million tons of steel produced last year, only about 36% was produced by the top 10 largest steel mills in China, and their portion is expected to increase this year.
China has been striving to streamline its heavy industries to reduce debt burdens and produce higher value products.
Export prices for steel products in the first seven months of the year rose by 43.3 percent to 686 U.S. dollars per ton compared to the same period last year, according to the CISA.
Shanghai benchmark steel rebar prices gained nearly 50 percent this year, hitting a four-and-a-half-year peak at 4,194 yuan (640.31 U.S. dollar) per ton in early September, as the market was boosted by expectations of tight supply due to rigorous capacity cutbacks and the environmental checks.
The price increases have led to booming profits at Chinese steel plants.
"The net profits of Chinese steel firms have raised by 390 percent in the first seven months this year to over 70 billion yuan. We expect to see at least 100 billion yuan in profits by the end of this year," Qu said.