Beijing, which for years required existing capacity to be cleared for new construction, has decided to end the regulation. The Ministry of Industry and Information Technology announced that these rules will expire as of Friday. The Ministry announced that it will develop an alternative program to determine new regulations.
Steel prices have fallen in recent months amid a growing abundance in the market, increasing calls for intervention by Chinese authorities. With steel demand down more than 10% since 2020, many analysts say the sector should shrink as the dependence on the steel-intensive construction sector decreases. In light of these developments, the authorities are considering urgent measures to address the problems in the sector.
From 2016 to this year, China's steel exports were at their highest level. This increase shows that Chinese producers are having difficulty finding sufficient demand in the domestic market for their annual production of approximately 1 billion tons.
The chairman of China Baowu Steel Group Corp. said last week that the steel industry is currently in a worse situation than the crises of 2008 and 2015. The warning highlighted the scale of the challenges facing the industry.
Steel futures were rising a little in Shanghai as the market remained quiet following the latest announcement. However, market analysts said they were cautious as many new capacity has already been announced and could come online in the next two years.
Iron ore prices have fallen due to the serious situation faced by Chinese steel producers in recent weeks. Iron ore, which has lost about 10% this quarter, fell to its lowest level since 2022 last week.
Comments
No comment yet.