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Reply with quote  #1 

The Chinese Government recently determined that the appropriate  level of capacity for sustained production of 800mt of steel was ~1 billion tonnes of capacity (i.e. 800mt working at 80% capacity utilisation). According to this calculation, excess capacity in China in 2016 was only 127mt (end-2015 capacity of 1127mt less target capacity of one billion tonnes).

On this basis, the Chinese Government further considered that capacity cuts of ~100-125mt over the period 2016-2020 would resolve the problem of excess Chinese steel capacity.

Do you agree?


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Posts: 1
Reply with quote  #2 
The calculations seem reasonable. There is much focus on steel capacity in China and the excess capacity in the rest of the world is sometimes overlooked.

The LME Seminar on 30 October 2017 in London ran a session on the Belt and Road initiative. It is unclear exactly how much steel this will use over what timescale but it is likely to support the effective use of capacity in the sector in China. One of the iron ore majors told me that they forsee stable demand for iron ore in the country for the next few years. Not increasing but not decreasing either. 
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