Analyst investment bank Credit Suisse, however, is skeptical about the past promises.
“China is planning reductions in steel production capacity by as much as 150 million tons and ‘large-scale’ reductions of kolutbudet as part of the supply-side measures designed to reduce the overcapacity in state-owned companies, “the news agency.
According to government data, China has reduced steel production by about 90 million tons of” in recent years “and aims further reductions of 100-150 million tonnes. Some time frames for the new measures are not presented.
Analysts at Credit Suisse is cautious to draw any far-reaching conclusions from the news.
“We have visited China since the early 2000s, and capacity cuts have been announced several times. Nevertheless, the net capacity is always increasing, “writes the bank.
Furthermore, it is important to distinguish between downsizing of production and capacity, according to analysts.
“We believe that it takes production cuts of 70 million tonnes in the absence of a proper recovery in demand to balance the market in the current situation. In addition, we believe that the required reductions in capacity of 200-300 million tons to achieve structural balance, “they write.
The Chinese steel production has risen from around 150 million tonnes in 2001 to 800 million tonnes today. Capacity during the same period increased from 200 million tonnes to about 1.2 million tonnes, estimates Credit Suisse.
China’s excess capacity is therefore greater than the total production in the United States, Japan and China together, noting the investment bank.
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