China Times reported that about two thirds of the steel companies in Hebei, the largest steel producer in China are reportedly having suspended operation or had their production cut. This is known to be a signal of slowing down of the economy growth.

Standard Chartered Bank said growth rate of China steel demand will come down to 4% in H2 this year due mainly to tardy development of the housing industry and auto consumption. The suspensions are attributable to slack market, a Mr Dai with FuHaixin Steel Co highlighted high production cost has squeezed their profit out.

Some agent disclosed that the steel mills are worried about poor demand, but at the first stage, mills losses were shared by the trading houses. The agents were required to take a certain amount of products each month, if not they would risk loss of deposit. But after all, the industry elimination is going on.

Tangshan has dismantled nine 400 cubic meters or smaller furnaces this year with two others being pulled down, the expectation says other 24 will be out before this September so total elimination of furnace capacity will be 7.3 million tonnes nearly half of the production in Tangshan last year.

A Tanggang source said forcing the small and medium size steel mills out will leave big producers more space of development, but the smaller one will remain to join the completion once the market is up, unless they are completely dismantled.

(Sourced from China Times)