First of all, steel industry production limitation is proposed when Chinese steel industry have been facing a long term of over capacity time. Many enterpries are busy with hunting for money and goverment refound,disregarding environment cost. As we know, steel industry always be our goverment macro-control system, ever breed plenty of people who work for it,yet many people are suffering many aspects problems in same reason. So our govertmen intervert it and publish production limitation order. This time, let us Gainford analysis the reason why have this order for you:
1.Steel production meet a huge overcapacity, especilly sheet problem
In 2008,crude steel production capacity over 600 billion tones， production is 500 billion tones,consumption 452 billion tones,consumption is 462 billion tones in 2009. It shows a huge distance in supply and consumpt. From the steel type,in the recent years, our country increase about 0.5 billion per year.About 90% of it is steel sheet. However,along with many big construction projects are completed, made the steel market go down, so the sheet production can not be use up in a long time, show a big distemce in supply.
2. Outdated capacity hold major proportion,it's blindness to recover steel production
Until 2011 end,China have knock out half of outdated capacity. But at present, many small and middle scale steel factories who belong to outdated capacity spring up like mushrooms. They are small, so it' easy to reborn with the advantages of capital and tools. So, it's not a good time to recover the steel industry. We guess, steel industry will be influenced by long term policy and market control.
Picture; Small steel factoris start working in Tangshan