Steel glut triggers output cuts
Steel coils
China's steel demand is shaping global markets
Japanese steelmaker JFE Steel has become the latest supplier to consider output cuts as Chinese demand cools.
European giants Mittal Steel, Arcelor and Thyssenkrupp all announced production cuts last week amid fears of a glut in global supplies.
China's steel output is soaring, but its demand is slackening as Beijing's moves to control the country's runaway construction boom take hold.
JFE Steel said it wanted to deal with supply and demand imbalances.
China last week imposed a 17% tax on exports of high-quality steel to limit its impact on the world market, and avoid trade tensions.
The move was announced by the State Administration of Taxation's website.
Steel surplus
China is the world's biggest producer and consumer of steel.
The country's steel output this year is expected to grow by 17.7% from 2004 levels, rising to 348 million tonnes, according to the government's most important think tank, the State Council Development Research Centre.
Demand will rise 10.2% to 305 million tonnes, creating a surplus of 43 million tonnes.
"Demand is slowing in China as the government cuts fixed-asset investments, while production is increasing," said JFE president Hajime Bada in an interview given to the Bloomberg news agency.
Mittal Steel, the world's biggest steel maker, has announced plans to reduce its output by one million tons in the third quarter of 2005, having already made similar reductions in the April to June period.
Mittal, headquartered in the Netherlands, said it was acting to "help to restore equilibrium in the global supply and demand equation".
French group Arcelor has cut production of flat stainless steel products in Europe by 15-20% since April because falling demand has led to a build-up of stocks.
Thyssenkrupp of Germany has also decided to cut its European stainless steel output by 20%, or 120,000 tonnes in the July to September period.
Prices for steel in China have fallen steeply. Hot-rolled steel prices are down 20% this year in the Chinese market, Bloomberg reported.
China's demand for steel has driven world market prices. Steel prices more than doubled from $300 a tonne in January 2003 to $700 a tonne last August, and have since declined.
news.bbc.co.uk |
