Insight

Can China meet its target to cut steel overcapacity?

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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.

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    Can China meet its target to cut steel overcapacity?

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This report includes 5 images and tables including:

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  • Overcapacity calculated assuming a normal utilisation rate of 85%
  • Margin will not significantly improve after 150 Mtpa closure
  • Market forces at work: lower margins lead to more closures
  • Massive financial liability when mills are shut down (CISA members, RMB billions)
  • Net profit margins of CISA members (majority SOEs) and private steel companies

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