(Aug 2): China’s steel industry is entering a precarious new era as a worsening property crisis imperils demand and Beijing’s construction-led growth model looks increasingly untenable.
Almost a third of China’s steel mills could go into bankruptcy in a squeeze that’s likely to last five years, Li Ganpo, founder and chairman of Hebei Jingye Steel Group, warned at a private company meeting in June. “The whole sector is losing money and I can’t see a turning point for now,” he said, according to a transcript of the gathering seen by Bloomberg News.
The real-estate crisis has ballooned this year, engulfing developers to banks, and forcing Beijing to soften its growth ambitions. Steel mills that churned out more than a billion tonnes last year, around half of global output, are highly vulnerable to the slump that’s also hit iron ore prices and miners from Australia to Brazil.
After more than a year of property pain, the outlook is worsening as the government baulks at big bailouts and keeps stringent debt rules in place. A steel purchasing managers index for July tumbled to its lowest reading since 2008, and Goldman Sachs Group Inc sees demand down by 5% this year. The property sector accounts for at least a third of Chinese steel demand.
Sumber – The Edge Market (https://www.theedgemarkets.com/article/chinas-property-crisis-threatens-drag-down-steel-industry)