LONDON, May 23, 2017 /PRNewswire/ --
The variability of steel demand through the cycle, as well as the underlying cost structure of large, integrated steel mills mean that up to 15% of over-capacity is hard-wired into the steel industry and cannot be eliminated. To do so would undermine the cost structure, operating model and delivery capability of the industry generally. All mills contribute to over-capacity to some degree, which makes it difficult to single out individual mills that are wholly at fault.
Based on the analysis here, CRU estimates that true excess capacity was just under 300 Mt globally in 2016 and this should fall to ~115 Mt by 2021, assuming China is able to close down 160 Mt of capacity. Most this excess-capacity will be in China (i.e. ~35 Mt), although this will only account for ~3% of overall capacity in the country, a much lower share than for most other regions.
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SOURCE CRU Insight