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Chinese steel capacity likely to grow further in 2015 - MIIT

Reuters reported that crude steel capacity in China is likely to grow this year despite difficult market conditions as new projects are coming on stream.

China's Ministry of Industry and Information Technology said that “Long standing overcapacity, slower growth in demand and tighter credit have forced many Chinese steel mills to produce at a loss or at low profitability. Generally, oversupply in the steel sector is unlikely to improve this year, exports will drop slightly, steel prices will stay at low levels and steel mills' profitability may not be positive. Investment in the ferrous metals smelting and processing industry fell 5.9% last year but remained at a relatively high level and there are still 2,037 new steel projects under construction. China's crude steel capacity reached 1.16 billion tonnes at the end of 2014, with its production accounting for 49.4% of global output.” 

However, some analysts expect capacity to increase by only about 10 million tonnes this year. 

The China Iron & Steel Association has forecast domestic crude steel output would fall 1.1% to 814 million tonnes this year, after rapid expansion over the past decade, as a slowing economy has hit demand for commodities.

China's apparent steel consumption fell 4% to 740 million tonnes last year, and steel demand is unlikely to improve much as Beijing is shifting its economic growth model and slowing fixed asset investment.