Chinese metallurgy on the verge of major changes

Overproduction and falling steel prices are synonymous with the Chinese steel industry. Despite all the plight of the steel market in China, steel production jumped 4.9 percent in the first 4 months.

The government targets moderate economic growth of 7.5 percent in 2014, linked to satisfying steel millet in rural infrastructure and the rail network. In addition, the government has planned some drastic measures aimed at reducing 15 million tons per year of obsolete steel production capacity and 15 million tons of pig iron capacity by the end of 2015. Additional measures have been taken to tackle pollution in the form of emissions.

In mid-May, Chinese factories slightly reduced production due to weak market sentiment. Specifically, the CISA accounting found that about 80 percent of China's total steelmakers reduced daily steel production by 1.3 percent over the period under review. According to market participants, this is due to the seasonal decline in demand in the domestic market.

The Chinese authorities are confronted with the reality of oversaturation of the market and outdated production, which is highly polluting. In addition, attempts to curb production have not yielded the desired results. This is mainly due to the fragmented structure of the industry, in which businesses located in abandoned areas continue to work on solving socialist problems, creating new jobs, which dilutes the government's efforts.