4 May 2016

The problems of the global steel market are to blame for China

In any case, this opinion was voiced at the Brussels meeting on April 18, 2016. Its main purpose was to discuss ways to deal with the crisis of overproduction. At the same time, representatives of the American and European sides actively accused representatives of China. The OECD Steel Committee provided its own data. The volume of global production capacity in 2015 was 2.37 billion tons / year. The load level at the same time decreased to an average of 67.5%. The comparison was made in 2014. Capacity utilization during this period was 70.9%.

The fall in the cost of rolled steel in 2015 had a negative impact on metallurgical companies. Some suppliers have difficulties with debt servicing. As a result, they ask shareholders for additional investments. As for China, on the whole, the country produces 1.2 billion tons of steel products annually. Such volumes openly exceed domestic needs. According to sales representatives, it is necessary to stop the support of unprofitable enterprises. The same goes for subsidizing export supplies. State-owned companies need to follow the rules followed by private corporations.

Western states require a reduction in both production and export of steel to the PRC. In this case, sanctions are mentioned, which will follow if the set conditions are not met. The Western countries substantiate their ultimatum with the preservation of structural problems. The establishment of trade restrictions is a necessary measure to protect the national industry of the United States. The same applies to jobs. European representatives talk about the introduction of anti-dumping duties. They will touch a very wide range of steel products of the People's Republic of China. At the same time, the tariff will exceed 200%.

The Chinese side says that the reduction in capacity is quite cheerful. Over the last time, about 90 million tons / year of extra capacity was decommissioned. Over the next five years, 100-150 million tons should be closed. A large share of the steel produced is used in the domestic market. Only 14% left the total volume of smelting for export. The Chinese side believes that the main cause of the crisis is a drop in world demand. As for excess capacity, the issue is relevant not only for the PRC. However, it is China that other countries use to justify their mistakes.

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