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Chinese Steel production may shrink further in 2017

With local  demand slowing down the steel production in China is expected to come down  further in 2017, according to China Iron and Steel Association. The original  estimate was 3 percent decline this year, but the decline in output imight be  less than anticipated but the downtrend will remain  unchanged.

Many public statements from Beijing have said  China will get serious about curtailing production in the second half of the  year and also reduce stimulus measures to the sprawling Chinese carbon steel  industry.

Citigroup, UBS Group, Morningstar and others are predicting a  fall in steel prices and iron ore, as well, as demand wanes in the world’s  largest consumer.

It is cautioned that steel is one of many metals  and minerals in a decade-long decline. China’s excess capacity equates to nearly  4 times actual steel production in the U.S. in 2015, so the resilience of  loss-making capacity in China reflects the heavy involvement of local  governments eager to support employment, GDP, and tax revenue rather than  optimize profitability.