Chinese steel mills and traders are struggling with cash flow cuts due to the rapid increase in stocks and slow sales.
Production plans already announced by metallurgical plants will force them to produce 2.6 million tons of pig iron in March. However, according to analysts from Singapore, this is a very optimistic forecast.
According to them, the reduction will be even 4.5-5 million tons. This, in turn, means that compared with the same period last year, steel production will decline from 7.5 to 9 percent. Moreover, as Singaporean analysts admit, even these data can be unreliable.
Indeed, according to unofficial information from China, for example, Dazhou Iron & Steel from Sichuan in southeast China, specializing in the production of long products, has already suspended all production. And this is not the only one who decided to take such a step.
The problem for Chinese steelworkers is a growing stock of products that no one should acquire.
The stock of finished steel at steel mills, controlled by the China Metallurgy Association, amounted to 21.34 million tons (as of February 20), an increase of 45 percent. year after year.
The problems of Chinese metallurgical plants are the consequences of coronavirus. The epidemic actually froze the work of many sectors of the economy that were important for the metallurgist. Outboard construction is a problem. In some provinces, after the New Year holidays, work began with only one in ten investments.
If this situation persists in April, some companies will lose liquidity and will need government assistance.
