BEIJING (Reuters) – China’s steel mills may have taken a wrong turn by adding millions of tonnes of new high-end capacity just as the country’s car sector, a key steel consumer, undergoes its first contraction in decades, cutting metal demand. Hot-rolled coil (HRC), steel that is heat processed into metal sheets used for car bodies and household appliances, was a steady profit driver for mills but orders are now slowing down, two major steel mills and several traders told Reuters. Sliding demand for hot-rolled coil is a further barometer of China’s lagging industrial sector which is struggling with lower profits amid a trade war with the United States. Weakening steel end-user demand will add to the government’s concerns about job layoffs as Chinese economic growth was at its slowest in 28 years in 2018. The slowdown, occurring as overall steel profit margins have dropped 60 percent in the past three months, threatens to push China’s entire embattled steel sector further into debt, forcing mills to cut costs and leaving them unable to upgrade products and processes, said analysts and mill executives. “We may have to lay off 10 percent of our workers this year,” said a manager at a medium-sized… continue reading
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