Steel industry booms on back of reforms 
2019-01-15
Chinese steel producers saw their profits surge in the first 11 months of 2018 as the sector’s overcapacity was slashed amid supply-side structural reform, according to an industry association.
Data from the China Iron and Steel Association showed the combined profits of its members’ enterprises jumped 63.54 percent year on year to 280.2 billion yuan (US$41.5 billion) in the first 11 months.
Their debt ratio declined to 65.74 percent by the end of November.
That was down 3.39 percentage points from a year ago, with half of the enterprises seeing a debt ratio below 60 percent.
The improvement in corporate profitability came after the country fulfilled its goal of reducing the steel industry’s capacity by 100 million-150 million tons from 2016 to 2020 ahead of schedule.
By the end of 2017, steel overcapacity had already been slashed by over 115 million tons.
“The market environment has improved markedly, and the bloated capacity has been effectively addressed,” said Yu Yong, CISA chairmann.
However, he cautioned that the foundation for sustained profitability remains shaky as costs have increased while steel prices have started to retreat due to such factors as lower demand and growing output. 
