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Baosteel forecasts China 2011 steel capacity to rise by 40 mln T- 10 May 11

China's total crude steel production capacity is likely to rise by 40 million tonnes this year, a senior Baoshan Iron and Steel Co Ltd official said on Tuesday.

Vice-General Manager Chen Ying originally told an online conference for shareholders that the increase would stand at "more than 55 million tonnes" compared with 53 million tonnes last year, but the figures were quickly revised.

Her comment that the large capacity increase would have a "definite impact" on the company's performance was also removed.

China has struggled in efforts to tackle the steel industry's long-standing overcapacity problems, which have weighed on prices and profitability. Baosteel's first-quarter profit fell 22 percent as a result of higher raw materials costs and a supply glut on the local market.

Last week, the China Iron and Steel Association said domestic crude steel capacity stood at 768 million tonnes at the end of last year, far higher than actual output of 627 million tonnes over the year. The association blamed small steel producers, which saw a 52.72 percent increase in capacity year on year in January and February this year, compared with a rise of just 6.86 percent at their large state-owned counterparts.Beijing has drawn up new measures aimed at blocking capacity expansions by some of the minnows, and also plans to raise environmental and technical standards in order to streamline the sector. It aims to put 60 percent of total steel capacity in the hands of its top ten mills by the end of 2015.

May 10, 2011 09:49
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