China Steel Corp (中鋼), the nation’s largest and only integrated steelmaker, said yesterday it would cut output next year.
In a stock exchange filing, the firm said it would reduce capacity by at least 1 million tonnes next year through furnace closures, confirming media reports.
The Chinese-language Economic Daily News reported yesterday that the furnace closures were being planned to prop up sagging steel prices.
China Steel dismissed the claim, however, saying the closures were for annual maintenance.
Under the company’s plan, China Steel will close one blast furnace in the middle of next year and let another go idle at the end of next year for a period of to to three months each, the filing said.
“Capacity steel makers across Asia are feeling the pressure from steel price cuts by Baosteel (寶鋼) and other major steel makers in China. While we applaud China Steel’s apparent intention to cut capacity, steel prices still face additional downside” pressure, SinoPac Securities Corp (永豐金證券) said in a client note yesterday.
SinoPac said the shutdown could cut China Steel’s capacity by up to 2 million tonnes per year or 18 percent of its output.
The announcement of the furnace closures came ahead of the company’s release of its domestic steel prices for the first quarter today. The company is expected to announce its first price cut in almost three years after Baosteel last week cut prices for a fourth time in two months.
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