China’s steel output drops for the first time in more than 30 years

China reported a fall in steel output in 2015, the first decline in more than 30 years, as the economy slowed sharply raising more concerns for the already beleaguered global commodities sector.

Government data showed crude steel output fell 2.3 percent to 804 million tonnes last year, as December production dropped by 5.2 percent to 64.37 million tonnes as compared to the same month in the previous year, according to the National Bureau of Statistics.

China is battling overcapacity in an industry that has seen a sharp drop in demand due to a shift in the nature of the economy that is moving more towards consumption from large-scale investments in manufacturing.

The massive steel sector in China, the world’s biggest producer and consumer, is believed to have a surplus capacity of about 300 million tonnes. Continued weakness in demand is expected to further erode demand in 2016.

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