With local demand slowing down the steel production in China is expected to come down further in 2017, according to China Iron and Steel Association. The original estimate was 3 percent decline this year, but the decline in output imight be less than anticipated but the downtrend will remain unchanged.
Many public statements from Beijing have said China will get serious about curtailing production in the second half of the year and also reduce stimulus measures to the sprawling Chinese carbon steel industry.
Citigroup, UBS Group, Morningstar and others are predicting a fall in steel prices and iron ore, as well, as demand wanes in the world’s largest consumer.
It is cautioned that steel is one of many metals and minerals in a decade-long decline. China’s excess capacity equates to nearly 4 times actual steel production in the U.S. in 2015, so the resilience of loss-making capacity in China reflects the heavy involvement of local governments eager to support employment, GDP, and tax revenue rather than optimize profitability.
