According to a new report issued by the China Iron and Steel Association (CISA), in the first half of the current year domestic steel enterprises have overall recorded increased net profits or switched from previous losses to profits, providing support for the implementation of supply-side reforms and elimination of excess and outdated capacities over the second half of the year.
However, as indicated by the CISA, challenges still exist as regards cutting excess capacity of crude steel, while some production capacities have actually resumed activity or increased output in the first half of the year due to the rising trend of finished steel prices. The implementation of capacity cuts in the second half of this year will also face the issues of staff resettlement and settlement of debts against the background of financial constraints on domestic steel enterprises. In the first half of the current year, supply of credit from banks to domestic steel enterprises were strictly regulated amid restrictions on credit for enterprises with excess and outdated capacity. The CISA added that a lot of work still needed to be done.