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China's economy grew at an annual rate of 7.5
percent in the second quarter, up slightly from 7.4 percent in
the first three months of the year, responding to a modest
stimulus package that included tax cuts for small firms, reserve
requirement cuts for some banks and infrastructure spending.
New housing construction helped drive an improvement in steel
demand in June, and inventory levels declined 5.65 percent
declined from the end of May, but prices still remained near
11-year lows, the China Iron and Steel Association (CISA) said.
"Steel production remains at a high level, which isn't conducive
to easing the oversupply problems in the steel market, and it
will be difficult for steel product prices to see any
large-scale recovery," it said in its monthly market report.
China's steel sector has been plagued by overcapacity, and
industry officials have expressed hope that weakening demand and
higher environmental compliance costs will help winnow out
smaller, inefficient producers.
The local government of the major producing region of Hebei near
Beijing is also planning to shut as much as 60 million tonnes of
ageing, polluting steel capacity by 2017.
Daily crude steel production still hit a record 2.31 million
metric tons (2.54 million tons) in June, data from the National
Bureau of Statistics showed on Wednesday, with output over the
first six months of the year reaching 411.9 million tonnes, up 3
percent.
CISA said that while fixed asset investment in the ferrous
metals sector fell 8.4 percent to 215.7 billion yuan ($34.77
billion) in the first half of 2014, it remained at a relatively
high level and new production capacity was still coming on line.
Industry estimates suggest China's total steel capacity stands
at more than 1 billion tonnes, compared to an annual production
rate of 779 million tonnes in 2013.
(Reporting by David Stanway; Editing by Tom Hogue)
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