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China continues to reduce capacity

The Chinese company Baosteel is the second largest national producer of steel. Recently, the company reported stop one of the blast furnaces. Annual production capacity closed on the head of the furnace plant is 2.5 million tonnes of pig iron. Domna belonged to Baosteel Stainless. This unit focuses on production of stainless steel. Mostly through the furnace produces carbon steel. Because the volume produced at the mill stainless steel will remain unchanged, at around 1 million tonnes annually.

The company said that the closure of the blast furnace is produced in response to calls by the Chinese authorities. We are talking about reducing excess production capacity and the limitation of steel production. Leadership of Baosteel hopes that this step will help in optimizing the structure of the metallurgical sector of the PRC. In 2012 the management of the Corporation has been already considered reducing production. It was supposed to reduce the production of steel at the Shanghai plant. Considering the volume was 6 million tons annually for five years. The procedure was intended to reduce the level of contamination of the environment. The Corporation is increasing production capacity in southern China. Last year was commissioned the first plant of Zhanjiang. Its planned annual capacity is 10 million tons of steel.

His assessment of the activities of the Corporation gave to the World Steel Association. In 2015, Baosteel produced about 35 million tons of steel. In comparison with 2014 production volumes decreased by 2.65%.

Meanwhile, the profit of Chinese steelmakers continues to decline. Their data provided the publication «Information Times». In accordance with the average level of gross profit per ton of steel is about 0.15. The results at the beginning of June the market the cost of rent has dropped by more than 30%. Comparison was made with the April figures. While production costs fell by only 10%. In April, the gross profit of Chinese manufacturers amounted to 123 USD per ton. Willy-nilly, Chinese steelmakers were forced to reduce production. The process is much faster in comparison with 2015. In the past year to stop the extra capacity it took several months of increasing losses. It is not excluded that the planned capacity reduction will be made ahead of time.

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