China steel mills face losses, overcapacity

BEIJING: China’s steel mills, which supply half of global output, churned out less steel in the first two months of the year, extending a decline amid government efforts to reduce reliance on manufacturing for growth.

Crude-steel production for the January-to-February period dropped 5.7% from a year earlier to 121.07 million metric tonnes, data published by the country’s statistics bureau on Saturday showed. Steel products output fell 2.1% to 162.28 million tonnes.

Steel mills in China are battling losses and overcapacity as the nation transitions its economy to one fueled by consumption and services, from growth driven by manufacturing, and have seen their output fall off record highs in 2014. Steel output tends to drop before and during the weeklong Lunar New Year holiday, which began on February 8 this year, before climbing after the break when manufacturing activity picks up. January and February is a lull period for the steel industry, Huang Huiwen, an analyst at Shanghai Cifco Futures Co in Shanghai, said before the figures were published. “We expect a recovery in March data as sentiment toward China’s economy and demand has improved.”