"In the first two months of this year, we were doing well, but many steel mills around us started to lose money." A management of Tangshan Guofeng Iron and Steel Co., Ltd. is not optimistic about the steel market this year. As a state-owned holding steel production enterprise located in Hebei Province, the largest steel-producing province in China, Guofeng Iron and Steel Co., Ltd. has witnessed the rise of more and more new blast furnaces and new production lines in the surrounding steel mills in recent years and the production capacity of its own steel mills. But it hasn't changed much in five years.
"Overcapacity has been shouted for many years, but in recent years steel production capacity is still increasing, once the market is not good, there is always a short-term stimulus policy to save the market." For example, the price of screw steel, which had plunged sharply since June 2011, doubled under the stimulus of $4 trillion. By May of last year, the NDRC had concentrated on approving a series of subway and airport construction projects after investment demand such as infrastructure had been almost digested. The steel price will rise again.
But many steel mills, including Guofeng Iron and Steel, have not shown much excitement about the "new urbanization" that is widely expected to further stimulate steel demand. They believe that the long-term goal of urbanization will not bring about a short-term surge in steel demand like the $4 trillion policy, while China is a huge country. The steel production capacity has fallen into the more vicious circle.