China’s steel industry posted higher prices and better profits last year as a result of progress made in reducing excessive capacity, the official Xinhua news agency quoted the Ministry of Industry and Information Technology (MIIT) as saying.
The steel price index came in at 121.8 at the end of December, up 22.4 percent from the beginning of 2017, the MIIT said.
The ministry attributed the increase to cutting overcapacity, a ban on low-quality steel, production restrictions during winter, and recovering market demand.
China slashed its crude steel production capacity by more than 50 million tonnes in 2017, exceeding its annual target, as part of efforts to improve the competitiveness of the bloated sector, Xinhua reported.
The country also phased out the production of 140 million tonnes of low-quality steel made from scrap metal last year
The industry’s profitability improved, with major steel producers’ profits surging 613.6 percent, the MIIT cited data from the China Iron and Steel Association as saying.
Despite the improvement, the MIIT warned of more difficulties in further capacity reduction as the increased profits may lure some producers to launch new projects, Xinhua said.
China plans to eliminate 100 million to 150 million tonnes of crude steel capacity in the five years from 2016, the news agency added.