Chinese steel output dropped 3 percent in September from a year ago to 66.12 million tonnes, as an industry official warned the world's biggest steel sector was already in decline after years of rapid expansion. Data from the National Bureau of Statistics showed that steel output in the first nine months of 2015 fell 2.1 percent on the year to 608.94 million tonnes.
China's steel demand has now peaked and the sector is facing the consequences of earlier expansion, an industry official told a conference last Friday. "Chinese steel consumption has already gone into decline, and it is going to have an immense impact on the sector," said Li Xinchuang, vice-secretary general of the China Iron and Steel Association (CISA). Li said around half of China's steel firms were facing losses, while debt ratios in the sector were at an average of around 70 percent.
The debt-laden steel trader, Sinosteel, said Monday that it had extended the date investors can start redeeming its bonds by a month until November 16 amid reports it had asked investors to hold off seeking repayment due to liquidity problems. With prices at nearly 30-year lows, steel producers are expected to cut output further in coming months.
"We expect more output cuts ahead and some will not be able to survive from cash shortages and heavy losses," said Qiu Yuecheng, analyst at the steel trading platform Xiben New Line E-Commerce in Shanghai.
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