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 The China Iron & Steel Association (CISA) said March steel
production hit 70.65 million tonnes, amounting to 834 million tonnes
on an annualized basis. Traders and analysts predicted more
increases in April and May.
The data comes as major steel producing countries failed to agree
measures to tackle an industry crisis, with differing views over the
causes of overcapacity. A meeting of ministers and trade officials
from over 30 countries, hosted by Belgium and the OECD on Monday,
concluded only that overcapacity had to be dealt with in a swift and
structural way.
Washington pointed the finger at China, saying Beijing needed to cut
overcapacity or face possible trade action from other countries.
"Unless China starts to take timely and concrete actions to reduce
its excess production and capacity ... the fundamental structural
problems in the industry will remain and affected governments -
including the United States - will have no alternatives other than
trade action to avoid harm to their domestic industries and
workers," U.S. Secretary of Commerce Penny Pritzker and U.S. Trade
Representative Michael Froman said in a statement.
Asked what steps the Chinese government would take following the
unsuccessful talks, Commerce Ministry spokesman Shen Danyang told
reporters on Tuesday: "China has already done more than enough. What
more do you want us to do?"
"Steel is the food of industry, the food of economic development. At
present, the major problem is that countries that need food have a
poor appetite so it looks like there's too much food."
In a monthly report, the CISA said a recent rally in steel prices in
China - up 42 percent so far this year - was unsustainable given the
rising production, and it warned that increased protectionism in
Southeast Asia and Europe would make steel exports more difficult.
"The big rise in steel prices has led to a rapid reopening of
capacity that had been shut or suspended ... a large rise in output
will not be good for the gap between market demand and supply," the
CISA said.
The OECD says global steelmaking capacity was 2.37 billion tonnes in
2015, but declining production meant only 67.5 percent of that was
being used, down from 70.9 percent in 2014.
Britain in particular has felt the squeeze as its largest producer
Tata Steel has announced plans to pull out of the country,
threatening 15,000 jobs. Last week, more than 40,000 German steel
workers took to the streets to protest against dumping from China.
China, the world's top steel producer, has ramped up exports of
steel in recent years, as it steers its economy into services-led
growth and away from traditional manufacturing, while avoiding mass
job losses. China's steel exports jumped 30 percent to 9.98 million
tonnes in March from a year ago despite a slew of anti-dumping
measures globally.
Blaming China for the global steel industry crisis is simply a lazy
excuse for protectionism and will be counter-productive, China's
official Xinhua news agency said.
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"It's more been their competitive advantage into Asian countries
which has really driven that rise in exports," said Daniel Hynes,
commodity strategist at ANZ Bank. "I think that will continue and
will keep those export levels relatively high despite the pressures
we're seeing now."
DEEP DIVISIONS
The deep divisions between China and rival producers were clear at a
news conference following Monday's meeting.
Cecelia Malmstrom, the EU's trade commissioner, insisted governments
should not grant subsidies that keep unviable plants running and
should subject state-controlled firms to the same rules as the
private sector.
China's assistant commerce minister, Zhang Ji, said China had cut 90
million tonnes of capacity, with plans to reduce it by a further
100-150 million tonnes. "That is only 10 million tonnes less than
the capacity in Europe," he said, although critics say China would
still have a capacity of around 1 billion tonnes, far in excess of
its needs.
The CISA has previously acknowledged that the flood of Chinese steel
product exports is damaging to Beijing's to gain market economy
status from the European Union - an important goal as its domestic
economy slows.
Tensions have erupted between other producers, too, with Japan
leading criticism of Indian minimum prices for imported steel at a
recent World Trade Organisation meeting. Japan and South Korea have
also come under fire for exporting steel products cheaper than they
sell them at home.
In a step to reduce trade frictions with Washington, Beijing agreed
to scrap some export subsidies on products including steel, the
United States said last week.
On Monday, the United Steelworkers union (USW) said it filed a case
with U.S. regulators seeking to stem a "flood" of aluminum imports
which it says damage U.S. producers and threatens jobs.
The case is the latest move by the U.S. aluminum industry to prod
the authorities to investigate the impact of rising imports,
particularly from China.
(Reporting by Philip Blenkinsop and Sue-Lin Wong, with additional
reporting by Eric Beech in WASHINGTON, Melanie Burton in MELBOURNE,
Ruby Lian and David Stanway in SHANGHAI, Manolo Serapio Jr in MANILA
and Meng Meng in BEIJING; Editing by Lincoln Feast and Ian Geoghegan)
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