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The unbearable "leftover" of steel

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2021-09-22

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"In the first two months of this year, our business situation was not bad, but many nearby steel mills have begun to lose money." A management of Tangshan Guofeng Iron and Steel Company is not optimistic about the steel market this year. A state-owned steel production enterprise in Hebei Province, the largest province, Guofeng Iron & Steel has witnessed the rise of more and more new blast furnaces and new production lines in the surrounding steel mills in recent years. There has been basically no change in the past five years.

"Overcapacity has been shouted for many years, but the steel production capacity in the past few years has continued to increase. Once the market fails, there will always be short-term stimulus policies to rescue the market." The above-mentioned management reluctantly told China Business News. The reporter said, for example, stimulated by the 4 trillion policy, the price of rebar, which once plummeted, has doubled since June 2011. In May last year, after the investment demand for infrastructure and other investment was almost assimilated, the Development and Reform Commission conducted a series of centralized approvals. The subway and airport construction projects once again drove a new round of rise in steel prices.

As for the “new urbanization” that is widely expected to further stimulate steel demand, many steel mills, including Guofeng Steel, have not shown much excitement. They believe that the long-term goal of promoting urbanization is not Like the 4 trillion policy, it will bring about a rapid increase in steel demand in the short term, while China's huge steel production capacity has fallen into a vicious circle of more and more elimination.

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