The meager profit of the industry will become the norm in the era of overcapacity in steel

China is about to enter the era of overcapacity in the region. As of 2011, according to the calculation of relevant institutions, China's total crude steel production capacity is expected to reach 850 million to 900 million tons, significantly higher than the demand of more than 600 million tons, showing a surplus situation. China's Pearl River Delta region and some provinces and cities in the central and western regions are still in the early stage of industrial development, there is a certain gap between supply and demand, and some steel mills can also enjoy the favorable regional market dividend. However, in 2012, Baosteel Zhanjiang and Wugang Fangchenggang were approved for two 10 million-ton steel projects, which are expected to be completed and put into operation in 2014 and 2015 respectively. The capacity construction of Xinjiang Shougang, Baosteel and Xinxing Casting Pipes totaling more than 10 million tons is progressing smoothly. In 2012~2013, it will be put into production successively; the relocation of heavy steel will be approved, and the production capacity will also advance to 10 million tons; the capacity of Xining Special Steel and Jiugang, which are unwilling to be lonely, will also expand. The coastal steel base project and the expansion of the western steel industry have forced Chinese steel into the era of excess regional surplus. During the 12th Five-Year Plan period, the national production capacity of more than 900 million tons of crude steel will be significantly greater than the demand of 700 million tons. The steel production capacity will enter the era of national surplus in the whole region, and the industry's meager profits will become the norm.

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