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CISA wants to create a special fund

28 December 2015

Metallurgical Association CISA in China is considering the possibility of creating a special fund. It is expected that his main task will be to invest certain activities. Are they stopping excessive rolling and steel industries. Leaders of the association believe that in the foreseeable future demand for steel is unlikely to go up sharply. Hence the need to reduce production output. According to experts of World Steel Association, established in the PRC with the production situation is quite revealing. For the period January-November steel output in China amounted to 738.4 million. Tons. Compared to the 2014 figure was a decline of 2.2%. But the demand until the end of the year expected to fall by 5% or more. Drawing inferences about the average load, take into account 163 companies, both large and medium-sized. The average figure according to the company Mysteel reached 82% in October. This result exceeds the world average of 14%.

Excess production provoked the fall of the cost of steel products on the domestic market of the PRC. Overseas prices fell from 35% to 40% since January 2015. CISA estimated the results of the companies-members of the association for 10mesyachny period. According to them, 48 out of 101 companies completed the period with a loss. Their total volume reached about 11.1 billion. USD. As a result — increase export volumes. This leads to frustration on the part of importing countries. As a result — in the 11 months started 61 anti-dumping investigation in 22 countries. They affected 28 types of steel products imported Chinese suppliers.

CISA believes that with respect to stabilize the situation with the possible reduction of the volume of production. Wang Jianhua, an analyst at Mysteel, predicted the necessary steps. In 2016, he said production should be reduced by at least 5 or 6%. This is assuming that the intake will decrease by 4.5% or 5. Theoretically, all the constructions are correct. However, even loss-making enterprises do not stop. And there are a number of reasons why they keep «afloat.» As a result, there are companies in the country «zombie». Their effectiveness tends to zero, creates a receivable is unlikely to be repaid. And it is doubtful that companies will return to normal operation. But local authorities to close these businesses do not intend to. Mainly due to the fear of public discontent with the loss of a plurality of jobs. CISA says the compensation of the established foundation. But it is unknown how this fund will be replenished. And the list of funded activities is not installed.

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