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PrintBloomberg citing Ms Michelle Applebaum an industry analyst reported that China may permanently close about 20% of its annual production capacity in the next six months as global demand plunges.
Ms Applebaum, who runs a steel equities research firm at Highland Park in Illinois US, in a telephone interview told Bloomberg that “The slump allows the Chinese government to go back to its original industry plan to shut down inefficient steel capacity.”
She said that “Chinese government had largely set aside its plan to shut down high cost, high polluting steel plants because of a boom in demand as the domestic economy surged and global prices for metals jumped to records. China probably will resume cuts begun five years ago, concentrating on blast furnaces that use iron ore to make steel.”
She added that “Costs at some Chinese works are 30% to 40% higher than the average in lower cost steel producing countries,” such as Brazil. Chinese reductions in capacity will put more downwards pressure on iron-ore prices.”
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