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Beijing has been trying to consolidate the world's largest steel
market to curb excess capacity and pollution and has set a goal
for its top 10 steelmakers to own 60% of production capacity by
2020.
However, Chinese Society for Metals (CSM) president Gan Yong
said the trend is for less rather than more consolidation,
saying unplanned capacity expansion at smaller mills was coming
online while their big mostly state-owened rivals were
struggling to do the same as quickly.
"There are some places using steel as a key contributor to
economic growth as demand is robust," Gan told Reuters on the
sidelines of an industry event, adding some regions in China
were not managing overcapacity controls very strictly.
The Ministry of Industry and Information Technology recently
warned that the sector is still having trouble with increasing
illegal capacity, including new mills not approved by the
government and those that were supposed to be shut in capacity
swaps.
Gan warned of growing competition in high-end products too.
"There are signs of overcapacity in stainless steel, electrical
steel and auto sheet steel," he said.
In the first eight months of 2019, the world's top steelmaker
churned out 665 million tonnes of crude steel, up 9.1% on the
year.
Production by members registered with the China Iron and Steel
Association (CISA), mostly state-owned firms, grew at 5.9%
year-on-year during that period. Production by non-members,
mostly private firms, surged 19.4%, according to CISA.
China has eliminated 140 million tonnes of steel capacity at 700
small mills and 150 million tonnes of inefficient capacity at
larger firms in the past four years as part of its environmental
crackdown and supply-side reform.
(Reporting by Min Zhang and Dominique Patton; Editing by Emelia
Sithole-Matarise)
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