China to curb fast growing steel prices Policy,  Price 2017-02-17 08:43:00

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although progress had already been made to cut overcapacity in the steel industry in recent months, the elimination of outdated capacity remains a major challenge.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 or +86-351-7219322.

Editors Recommendations

1 Kazakhstan Jan coal output down 4.9% on yr 2018-03-16

Kazakhstan saw its coal production total 9.73 million tonnes in January, down 4.9% on the year and 7.7% on the month, showed data from the country's Committee of Statistics under the Ministry of Nat

2 The US Jan coal output down 7.7% on yr 2018-03-16

The US produced 63.11 million short tons (57.25 million tonnes) of coal in January, down 7.7% or 5.27 million short tons from a year ago yet up 0.95% from a month ago, showed data from Energy Inform

3 Global top 20 coal enterprises in 2017 2018-03-15

According to coal output in 2017, China Coal Economic Research Association listed out 20 largest companies in the world. Among the top 20 companies, 13 of them come from C

4 China Feb power coal price index up 3.29% on mth, NDRC 2018-03-15

China's monthly-issued price index of power generation coal rose to 567.21 yuan/t in February, up 18.09 yuan/t or 3.29% month on month and 44.72 yuan/t or 8.56% higher than the year before, showed

5 NDRC gives nod to 3 coal mine projects for capacity replacement 2018-03-15

The National Development and Reform Commission, China's top economic planner, has given green light to three coal mine projects in Xinjiang and Inner Mongolia, part of the capacity replacement drive t

6 What does Trump's 25% tariff mean to China's steel exports? 2018-03-14

On March 24, the US will impose 25% tariff on steel imports and 10% on aluminum, following President Donald Trump singed the order on March 9 (GMT +8). The tariff policy has put the globa

7 China's natural gas output and import continues to rise in Jan-Feb 2018-03-14

China's natural gas output totaled 26.19 billion cubic meters in the first two months this year, showed data from the National Bureau of Statistics on March 14. Compared with z

8 China's crude steel daily output averages 2.32 Mt in Jan-Feb, NBS 2018-03-14

China's daily output of crude steel averaged 2.32 million tonnes in the first two months this year, showed data from the National Bureau of Statistics. That added to a total output of 136

9 China's thermal coal prices falling at N. ports on weak demand 2018-03-13

China's thermal coal prices have been falling since the authorities set a price ceiling at northern ports on February 5, due mainly to a persistent slowdown in demand. On Mar

10 China coal industry de-capacity: from surplus capacity to backward capacity 2018-03-13

China will further phase out 150 million tonnes of coal production capacity in 2018 through market-oriented and law-based means, said Premier Li Keqiang in a government report on March 5.

Most Read Articles

1 China to cut 30 Mtpa steel capacity, 150 Mtpa coal capacity in 2018 2018-03-05

China will cut ineffective steel capacity of 30 million tonnes per annum (Mtpa) and coal capacity of 150 Mtpa in 2018, according to a government work report available to media on March 5 morning.

2 China targets record coal output of 3.7 bln T in 2018 2018-03-08

China aims to produce 3.7 billion tonnes of coal in 2018, an all-time high and up 7.3% from the previous year, the National Energy Administration (NEA) said on March 7. The NEA also said

3 China import thermal coal prices further dip on shrinking demand 2018-03-05

Offer prices for Indonesian and Australian coal for exports to China further weakened to track a fast downtrend in China, sources said. Panamax cargoes of Indonesian 3,800 Kcal/kg NAR wer

4 China sets ceiling on energy consumption in 2018, NEA 2018-03-09

China plans to control its energy consumption at 4.55 billion tonnes of standard coal in 2018, said the National Energy Administration on March 7 in a guideline. The guideline noted the p

5 Global top 10 coal producers, importers and exporters in 2017 2018-03-07

According to data from statistics institutes, customs and coal industry departments across the world, the world top 10 coal producers, importers and exporters are listed as follows:

6 China Shenhua and GD Power to forge JV 2018-03-05

China Shenhua Energy Co., Ltd, 73.06% held by China Energy Investment Corp (CHNENERGY), announced on March 1 to fund a joint venture with GD Power Development Co., Ltd, a listed subsidiary of the prev

7 Ling Wen: Coal is a good thing 2018-03-06

"Coal is a good thing and of course can be used in a clean way," said Ling Wen, president of China Energy Investment Corp and also a member of the CPPCC, on the eve of the country's annual politica

8 US Jan coal exports down 7.6pct MoM 2018-03-09

US coal exports totaled 7.96 million million tonnes in January, down 7.6% from December, but up 18.8% from the year-ago month, US Census data showed March 7. The month-on-month drop in exports ca

9 IMF warns that steel, aluminum tariffs will likely hurt economies 2018-03-05

The International Monetary Fund (IMF) warned on March 2 that U.S. import tariffs on steel and aluminum would likely cause economic damage to the United States and its trading partners, and urged count

10 Weekly China coal market news summary (Mar 5-Mar 9) 2018-03-09

China Feb coal exports surge 66.55pct MoM China's coal exports in February stood at 468,000 tonnes, soaring 66.55% on the month, showed data released by the General Administration of Customs on