China’s proposal to cut 100-150 million mt in crude steel production isn’t enough to help diminish the worldwide surplus of steel, Mexico’s steel association, Canacero, said late on Tuesday in an email sent to SteelOrbis.
According to the trade group, the proposal will result in “too little effects to solve the unbalance generated by the excess of capacity.”
Canacero said at the same time China is proposing to cut production, it’s also increasing steel output. “Baosteel, China’s second largest steelmaker, announced its intentions to increase output in 2016 by 20 percent,” Canacero’s document cited.
“Despite the shutdown in output, which we doubt will occur, the problem [of the glut of steel] will worsen in the coming years,” it argued.
China’s Ministry of Industry and Information Technology (MIIT) has recently proposed a policy in which the country’s top 10 producers should account for above 60 percent the nation’s total output.
According to Canacero, such a situation could create three to five gigantic companies, which would then generate a monopoly.
Canacero said the “real solution” for the Asian country is pressing China to eliminate domestic subsidies and the intervention of the government, at the same time working as a market economy.
Mexico’s steel association said North America will fight in a meeting in Brussels, Belgium, to be held in April 18, to establish rules to prevent governments to distort the operation of the markets in the medium term.
As for the short term, North America is committed to seek mechanisms of auto-restriction to Chinese exports. It added Chinese exports should occur in the context of a market economy.