Steel sector over-supply could persist: ANZ

BEIJING -- Further capacity reductions in the steel sector as suggested by a policy consultation proposal released in December 2020 is under consideration in China. In a research report, ANZ Bank says many regard the policy as a way to reduce steel production. However, ANZ believes represents a critical policy shift from quantity to quality control. "The potential impact of this is under-estimated," it says. 

"We expect steel output to rise slightly by 2.3% in 2021. With demand for steel moderating, the risks of over-supply are rising, and, as a result, steel prices may face a soft patch following the current boom," says the report.

"Over the longer term till 2025, China's intention to consolidate its steel industry capacity and to increase self-dependency for iron ore will pose downside risks to its iron ore imports, but the impact will be gradual."

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