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MAANSHAN Iron & Steel plans to cut its steel capacity by about 20 percent over the next three years as it tries to a weather a slowing economy and an industry-wide supply glut, a company executive said Friday.
China as a whole is trying to cut steelmaking capacity by between 100 million and 150 million tons in the next five years as it tries to tackle a chronic glut that has sent prices into a tailspin and saddled steel mills with huge losses and mounting debt.
Large-scale steel mills made combined losses of 11.4 billion yuan (US$1.76 billion) in the first two months of this year and more than 100 billion yuan last year, according to the China Iron and Steel Association.
Maanshan Steel plans to cut 4.2 million tons of capacity over the next three years, from current 22 million tons currently, said Qian Haifan, general manager of the company.
The company, the listed unit of Maanshan Steel Group, one of China’s biggest State-owned steel enterprises, also aims to expand its foreign business and will increase its overseas units from four to seven by 2017.
“We will stick to our export strategy of selling about 10 to 15 percent of our production abroad,” Qian said. “Steel mills have to become more international.”
China’s mills have been accused of dumping millions of tons of cheap steel on the global market, causing producers elsewhere to close and raising the risk of more antidumping actions against the country’s firms.
With protectionism on the rise, China’s exports were expected to fall this year, from a record 112 million tons in 2015, Qian said.
The firm aims to move up the value chain and produce high-end steel products like bearing steel and auto sheets, which China currently imports. Qian said the firm would upgrade its low-end production lines by 2020.
The firm will modify its production lines to customize its products in accordance with the requirements of its downstream users.
“Supply side reform doesn’t simply mean capacity cuts but also restructuring in output and quality,” he said. (SD-Agencies)
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