Steel bubble

China Can't Cool Down Its Steel Bubble | Research Reloaded

China Can't Cool Down Its Steel Bubble
10/22/2009 by Vincent Fernando

Still going... we're still waiting to see the massive value destruction that overcapacity could realize.

BEIJING – Despite China's campaign to slim down its steel industry, the country's crude steel production in September was the second-highest ever in terms of volume, underscoring the formidable challenge Beijing faces in curbing capacity.

The National Bureau of Statistics said Thursday that steel output rose 29% in September from September 2008 to 50.71 million metric tons.

"The signs point clearly to overcapacity, and we expect output will be maintained at high levels" in the coming months, said Ma Haitian, senior steel analyst with state-owned metals consultancy Antaike Development Co.

In the last three weeks, China's top policy-making bodies -- the State Council and the National Development and Reform Commission -- have singled out overcapacity in the steel sector as a top reform priority, intensifying a campaign that has dragged on fruitlessly for years.

But directives have proven difficult to enforce on the ground, and steel mills have continued to pump out more product, racking up a record 52.3 million tons of crude steel output for August.

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