China to curb fast growing steel prices

2017-02-17 08:43:00 Policy,  Price sxcoal.com

The Chinese government is encouraging steel companies to sign long-term contracts with coal and downstream steel consuming companies while improving their product quality, China Daily reported.


The measure, set out in a document issued by five ministry-level bodies, is aimed at stabilizing recently fast growing steel prices and further cutting the industry's overcapacity.


The document, jointly released by National Development and Reform Commission and other four ministries, said that although progress had already been made to cut overcapacity in the steel industry in recent months, the elimination of outdated capacity remains a major challenge.


Despite the rapid rise of spot and future prices for steel in the short term and the recent recovery in output and sales performance of steel companies, companies should carry out further efforts to reduce capacity to support economic growth, as the country's oversupplied steel sector has experienced years of plunging prices and factory shutdowns due to a sluggish economy, it said.


Analysts said despite the surge in steel price since the beginning of this year, the supply-demand situation has not changed and the government document aims to stabilize the market and prevent steel price from overheating and disproportionately rising.


According to Wang Guoqing, director of the Lange Steel Information Center, despite the surging steel prices, steel inventories remain high.


Figures from the center released that the total inventory of steel in 29 major cities in China exceeded 12.39 million tonnes as of February 10, a 35% increase compared with three weeks ago, surpassing the peak of 2016.


The construction steel saw the biggest growth, more than 8.31 million tonnes as of February 10, 50.8% higher than three weeks ago, it said.


The government needs to ensure that cutting overcapacity proceeds as planned, he said.


According to Huatai Futures, considering the current stable increase in steel output and off-season demand, the inventory for steel in 2017 is believed to exceed 18 million tonnes, the highest of the past three years.


China's crude steel output rose slightly last year, with crude steel production increased 1.2% year on year to 808.37 million tonnes in 2016, compared with a 2.3% decrease in 2015, according to the National Development and Reform Commission


China plans to reduce steel output by an additional 100 million tonnes to 150 million tonnes by 2020. Its 2016 target to cut 45 million tonnes was achieved ahead of schedule.


China will enact stricter rules for trimming steel overcapacity in 2017 after making significant progress in 2016, according to experts.


(Writing by Jessie Jia   Editing by Harry Huo)
For any questions, please contact us by inqury@fwenergy.com or +86-351-7219322.

Editors Recommendations

1 China 5,500 Kcal and 5,000 Kcal coal price trends may diverge 2017-04-28

Prices of 5,500 Kcal/kg NAR thermal coal traded at China's coastal coal market may further go down in the short run, while that for 5,000 Kcal/kg NAR coal may stabilize, traders said. A G

2 Risks increase for importing thermal coal into China 2017-04-28

China's imported thermal coal market saw risks increasing in the absence of any material improvement that could be expected in demand for the fossil fuel in the days ahead. Utilities in C

3 Holiday Notice – May Day 2017-04-28

Please kindly note that we will be on holiday on Monday May 1 for the May Day, one of the major holidays in China. There will be no publication of the Daily Market Watch that day, and the

4 China gas output ranks sixth in the world 2017-04-28

China is now the sixth biggest natural gas producer in the world, three places higher than in 2007, according to the Ministry of Science and Technology on April 27. Gas output expanded fr

5 China Coal Daily Track (Apr 28) 2017-04-28

Thermal coal Domestic marketMost miners in northern Shanxi cut mine-mouth prices by 10-20 yuan/t, in order to boost sales. Some miners in Shaanxi cut prices by 5-10 yuan/t for

6 Hunan Mar power consumption up 10.69pct on yr 2017-04-28

China's southern province of Hunan consumed 12.70 TWh of electricity in March of 2017, increasing 10.96% year on year, showed data from Hunan Supervision Office of the Energy Administration.

7 Shanxi first month direct power trades at 2.3 TWh 2017-04-28

North China's coal-rich Shanxi province has completed 2.3 TWh of direct power trade in the first month starting from March 23, sources learned from Shanxi Power Trading Center Co., Ltd. on April 26.

8 China Nuclear Power 2016 net profit up 14.06pct on yr 2017-04-28

China National Nuclear Power Co., Ltd (CNNP) saw its net profit increase 14.06% from the preceding year to 8.11 billion yuan ($1.18 billion) in 2016, announced the company in its annual report late Ap

9 Traders seek alternatives as Tianjin port bans trucked coal 2017-04-28

Trucked coal will no longer be allowed to enter China's northern port of Tianjin effective May 1, part of the country's efforts to battle air pollution, according to a notice from Tianjin Port and Wat

10 Chuanmei Group signs 2.85 Mt long-term coal contracts 2017-04-27

Sichuan Coal Industry Group, or Chuanmei Group, signed long-term coal supply contracts with power firms totaling 2.85 million tonnes for 2017, announced the company on April 24. After fiv

Most Read Articles

1 Beijing warns China steelmakers it plans 'year of attack' on mill overcapacity 2017-04-17

China's steel mills need to prepare for an even tougher assault on overcapacity this year as the government bids to make "fundamental" progress in reforming the sector, Reuters reported, citing an off

2 China Coal Daily Track (Apr 18) 2017-04-18

Thermal coal Domestic marketInner Mongolia reported a stable thermal coal market, and local miners had low coal stocks in the wake of sound sales. In Yulin of Shaanxi, some

3 China Coal Daily Track (Apr 19) 2017-04-19

Thermal coal Domestic market Some miners in Shenmu, Shaanxi reduced thermal coal prices by 10 yuan/t as sales decreased. Some miners in western Inner Mongolia said demand for

4 Ganqimaodu coal imports exceed 5 mln T 2017-04-20

Ganqimaodu border crossing in northern China's Inner Mongolia autonomous region imported 5.04 million tonnes of coal from neighboring Mongolia from the beginning of 2017 to April 12, up 179.8% from th

5 Power sector sees coal supply from CIL growing to 420 mln T in FY17 2017-04-20

The supply of coal by Coal India to power sector in FY 2016-17 increased by 1.3% to 420.2 million tonnes, showed the latest government data. The increase in supply comes at a time

6 S. China thermal coal market in wait-and-see sentiment 2017-04-17

A wait-and-see sentiment was spreading at the thermal coal market at southern China ports, with prices were on the decline amid waning demand. The demand was slowing down in southern Chin

7 China Coal Daily Track (Apr 20) 2017-04-20

Thermal coal Domestic marketMiners in Inner Mongolia and Shanxi cut thermal coal prices by 5 yuan/t, as demand softened on news that Tianjin port would ban truck-delivered coal.

8 SUEK produces 28.4 mln T of coal in 1Q17 2017-04-20

SUEK, the number one coal producer in Russia, has reported that the company produced 28.4 million tonnes of coal in the first quarter of 2017, representing a 1% decline in comparison with the same

9 China's central SOEs continue efforts to cut overcapacity 2017-04-21

China's central government-administered State-owned enterprises (SOEs) have pledged to continue to cut production overcapacity in some industrial sectors, aiming to reduce steel capacity by 5.95 milli

10 China supply-side reform reaps healthy return 2017-04-18

China has made new progress toward carrying out supply-side structural reform in the first quarter of the year, the National Bureau of Statistics (NBS) said on April 17. Analysts said a b