Insight
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7 Pages

Can China meet its target to cut steel overcapacity?


Can China meet its target to cut steel overcapacity?

Report summary

To tackle its chronic steel overcapacity problem, China is taking its toughest stance ever by aiming to cut about 100-150 Mtpa capacity by 2020. In this Insight, we evaluate the potential measures the Chinese government can take, discuss major challenges it will face, and assess how successful these measures will be in meeting this target.

What's included?

This report includes 1 file(s)

  • Can China meet its target to cut steel overcapacity? PDF - 296.67 KB 7 Pages, 0 Tables, 5 Figures

Description

This Metals Insight report highlights the key issues surrounding this topic, and draws out the implications for those involved.

For industry participants and advisors who want to look at the trends, risks and issues surrounding this topic, this report gives you an expert point of view to help inform your decision making.

Our analysts are based in the markets they analyse and work with high-quality proprietary data to provide consistent and reliable insight.

We provide unique in-depth analysis of the metals supply industry so you can make confident strategic decisions.

  • Executive summary
  • The size of China's steel overcapacity problem
  • The closure target and its impacts
  • The challenges in reducing overcapacity
    • Avoiding financial risk, particularly for private lending and trusts
    • Softening the blow of massive job losses
    • Handling SOE and private steel companies fairly
    • Reducing local government resistance to capacity closure
  • Conclusion

In this report there are 5 tables or charts, including:

  • Executive summary
  • The size of China's steel overcapacity problem
    • Overcapacity calculated assuming a normal utilisation rate of 85%
  • The closure target and its impacts
    • Margin will not significantly improve after 150 Mtpa closure
  • The challenges in reducing overcapacity
    • Massive financial liability when mills are shut down (CISA members, RMB billions)
    • Net profit margins of CISA members (majority SOEs) and private steel companies
  • Conclusion
    • Market forces at work: lower margins lead to more closures
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