Analysts said the Chinese steel industry is going through the hardest time it has ever experienced, with many companies operating at a loss and in danger of going bankrupt.
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“Production cuts are slower than the contraction in demand, therefore oversupply is worsening”, said Zhu.
As Bloomberg reports, Zhu Jimin, the deputy head of the China Iron & Steel Association (CISA), said on Wednesday that collapsing demand is putting the entire industry at risk. Shanghai Baosteel Group forecast last week that China’s steel production could eventually shrink by 20%.
“There are two ways of resolving the supply imbalance – raising demand or cutting supply, and in the current economic conditions, there is no hope of raising demand”, CISA’s Zhu said. “As demand quickly contracted, steel mills lowered prices in competition to get contracts”.
It’s been hammered as the world’s biggest miners, such as Rio Tinto and BHP Billiton, have boosted low-priced production to slash costs and protect market share, while steel consumption in China shrinks.
Crude steel output in the country fell 2.1 percent to 608.9 million tonnes in the first nine months of this year, while exports jumped 27 percent to 83.1 million tonnes, official data showed.
Reuters reported that the $50 a tonne price is a sign that losses will continue after Dalian futures slumped lower on Tuesday as Chinese steel producers cut output due to the decline in demand of iron ore. The outlook is the worst ever amid unprecedented losses, Macquarie Group Ltd said this month.
Gama, the head of Transnet’s freight rail unit, was named acting CEO of the company in April, after Brian Molefe was seconded to head Eskom Holdings SOC Ltd., South Africa’s state power company.
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Hangzhou Iron & Steel 600126.SS , another state-owned mill, will close its main Banshan production base by the end of 2015, while Maanshan Iron & Steel 600808.SS will shut a few production lines in the fourth quarter, the firms said.
