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although progress had already been made to cut overcapacity in the steel industry in recent months, the elimination of outdated capacity remains a major challenge.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 Weekly global coal market news summary (Oct 16-Oct 20) 2017-10-20

U.S. H1 coal production fell after increasing in late 2016 U.S. coal production averaged 192 million short tonnes per quarter in the first half of 2017, a slight decrease from the second half

2 Huadian Power Int. 3Qs power generation up 2.43% on yr 2017-10-20

Hong Kong-listed Huadian Power International Corporation, one of largest power generators in China, produced 142.65 TWh of power in the first three quarters of this year, up about 2.43% year on year,

3 NDRC urges to expand production of CBM, shale gas and coal-based gas 2017-10-20

The National Development and Reform Commission urged provinces and large state-owned energy enterprises to produce clean gases as much as possible to ensure energy supply in the coming winter heating

4 China power companies going green for blue skies, energy sector delegates say 2017-10-20

Major companies in the power-generation sector, including coal, have taken measures to lower pollution from consumption and mining, party delegates to the 19th National Congress of the Communist Party

5 NDRC gives nod to China Coal's two coal mine projects 2017-10-20

China Coal Energy Co., Ltd., the listed arm of China National Coal Group, has recently received approval to build two coal mines and associated washing plants in Ordos, Inner Mongolia, with annual cap

6 Indonesian miners keep thermal coal prices steady 2017-10-19

Indonesian miners continued to keep their offer prices steady for thermal coal, despite a lack of buying interest from Chinese buyers. A wait-and-see sentiment has dominated the market re

7 PetroChina shale gas output over 200 mln cu m 2017-10-19

PetroChina Southwest Oil & Gasfield Company has produced over 200 million cubic meters of shale gas by October 18 this year, increasing 160 million cu m from a year ago, the company said on the sa

8 China Sep raw coal output up 7.6% on yr 2017-10-19

China produced 298.12 million tonnes of raw coal in September, up 7.6% year on year and 2.53% month on month, showed data from the National Bureau of Statistics on October 19. During the

9 More Shanxi coal mines halt production amid national congress 2017-10-19

More coal mines, mostly producing coking coal, halted production in Shanxi in the wake of ongoing 19th CPC National Congress, local sources said. Following those suspended in Linfen

10 Higher seaborne freight dampens Chinese interest in overseas coal 2017-10-18

Chinese buying interest of overseas thermal coal was further hit by the recent surge in freight rates from Australia to southern China ports. Shipping sources said freight rate of Capesiz

Most Read Articles

1 China makes great progress in switch from coal to power heating 2017-10-16

China has made great progress in switching to electricity from coal for winter heating in northern part of the country, part of the government's efforts to tackle the long-standing air pollution issue

2 Mongolia coal exports cool as China border issue creates a bottleneck 2017-10-17

Mongolia's coal exports, which have helped lift its slow-growing economy this year, are losing steam, according to trade data. In the first nine months of the year, exports earned $1.73 b

3 Weekly global coal market news summary (Oct 9-Oct 13) 2017-10-16

Glencore, Japan's Tohoku Electric set annual coal price at $94.75/t Glencore Plc and Tohoku Electric Power Co have settled an Australian thermal coal import contract for October 2017-September 2

4 China steel and raw materials futures retreat after smog-driven rally 2017-10-19

Prices of steel and its raw materials futures pulled back on October 17, after recent gains that were fuelled by steel production cuts in top producer China that are part of Beijing's anti-pollution c

5 State power companies in India seek coal imports to tide over supply crisis 2017-10-16

Some state-owned power producers, who had stopped imports, are now looking at importing coal at a time when the Centre's focus is on reducing imports and eventually bringing it down to zero, Economic

6 Rio Tinto reports thermal coal production drop in Q3 2017-10-18

Rio Tinto has seen thermal coal production decline in the third quarter after the sale of its Coal & Allied business, the miner said on October 17, while lowering its output guidance for 2017.

7 CIL's production growth at 13% in Oct so far 2017-10-17

Coal India (CIL) has achieved production growth of 13% in the current month so far, PTI reported on October 13, citing India government as said. "The Minister (Coal Minister Piyush Goyal)

8 U.S. H1 coal production fell after increasing in late 2016 2017-10-18

U.S. coal production averaged 192 million short tonnes per quarter in the first half of 2017, a slight decrease from the second half of 2016 but still above levels reached in the first half of 2016, a

9 China power companies going green for blue skies, energy sector delegates say 2017-10-20

Major companies in the power-generation sector, including coal, have taken measures to lower pollution from consumption and mining, party delegates to the 19th National Congress of the Communist Party

10 South32 restarts Appin following broader Illawarra review 2017-10-16

Diversified miner South32 will restart production at its Appin mine, in New South Wales, following a review into its Illawarra metallurgical coal operating systems and processes. The comp