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China Bans Addition of Steel Capacity for 2020

By Lu Yutong / Jan 14, 2020 01:40 PM / Economy

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China has vowed to ban the addition of steel capacity this year in a bid to tackle oversupply, according to state news service Xinhua.

The China Iron and Steel Association (CISA), an industrial group that describes itself as a “bridge between government and enterprise,” said Monday that the country’s steel industry will not allow the addition of new steel capacity this year.

That would help consolidate the achievements of supply-side structural reforms, the group said. Reforms that reduced around 150 million tons of excess capacity between 2016 to 2018.

The ban came after a forecast by CISA found slowing demand growth would see it fail to keep up with supply this year.

https://www.caixinglobal.com/2020-01-13/specter-of-oversupply-returns-with-robust-steel-output-forecast-for-2020-101503621.html

China’s total crude steel output for 2020 would grow at a similar rate to last year’s 6%, but growth in demand should slow sharply to 2% amid a broader economic downturn, CISA said at its annual meeting on Saturday.

A slowdown in real estate construction growth would be sharp enough to offset steady growth in demand from domestic infrastructure investment and the home appliance industry, the group predicts.

It has also pledged to remove outdated technology to increase efficiency.

The World Steel Association has forecast that Chinese steel demand will grow by a little as 1% this year. Domestic steel output was around 980 million tons in 2019, while demand grew at similar rate to 875 million tons for the year, the group said.

Contact reporter Lu Yutong (yutonglu@caixin.com)

Related: Specter of Oversupply Returns With Robust Steel Output Forecast for 2020


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