Chinas steel industry struggled against overcapacity and
weak product prices during 2013.
Even though production
slowed during the final two months of the year as Beijing
tightened environmental regulations to combat high pollution
levels, the industry produced a record 779 million tonnes of
crude steel for the year, up 7.5 percent from 2012, accounting
for almost half of global steel output of 1.6 billion
Air pollution was a
key topic of discussion in China last year, with its heavy
industries coming under increasing pressure to curb
Hebei came under
particular scrutiny. Many steelmakers in Wuan scaled back
production at their rolling mills in early December in response
to temporary pollution control measures imposed by the local
amm.com, Dec. 11). Electricity supply to mills in
the city was reduced by between 30 and 50 percent, a local
producer source told AMM sister publication Steel
First at the time.
authorities had announced in September that the region would
need to cut more than 60 million tonnes of capacity by 2017 to
control pollution (
amm.com, Sept. 13), and more than 2 million tonnes
of iron and steelmaking capacity were trimmed in November.
Beijing also has urged
greater consolidation in major steelmaking provinces, including
Jiangsu, Jiangxi, Liaoning, Shandong and Shanxi.
Chinas existing crude steel capacity at more than 1
billion tonnes most market participants have said they believe
the efforts fall far short of whats needed to effectively
tackle Chinas overcapacity problem (
amm.com, Dec. 30).
countrys finished steel exports surged to 62.34 million
tonnes last year, up 12 percent from 2012, as mills expanded
their overseas markets.
Amid such an
oversubscribed industry, very few Chinese steel mills remained
profitable in 2013. Those that did succeeded through the
expansion of noncore businesses or the sale of assets.
steelmaking profits averaged just 8.1 yuan ($1.34) per tonne of
crude steel during the first 11 months of 2013.
Chinese steel mills also were squeezed by upstream raw
material costs. Average seaborne iron ore prices rose 5 percent
in 2013 from a year earlier, while average steel product prices
fell amid increased output and sluggish demand, with rebar down
8.9 percent year on year.
A version of this article was first published by AMM sister
publication Steel First.