Manufacturing News

China's steel industry in crisis

China's iron and steel industry is looking down the abyss. Plagued by over-capacity and high competition, profits have plunged. Compounding the problem is a severe rise in levels of pollution.

This blast furnace cost around 60 million yuan and took over two years to build.

But today it stands lifeless, unused. Worse, the company knew this would happen, but went ahead and built it.

According to statistics released by the China Iron and Steel Association, nearly half of its 86 members are losing money, and their average selling profit stands at only 0.13%.

Most steel companies in Hebei produce crude steel. Over capacity and fierce competition have dragged profits down.

But the overall volume of production has soared over the past few years. Hebei Xin Gang Iron & Steel Group raised its production volume by nearly 80 percent last year.

By the end of 2011, China's total crude steel ouput capacity stood at 90 million tons.

But the cost is also striking. In the province's Zhou Zizhuang village, an iron and steel plant stands only thirty meters away from residential areas.

The Ministry of Environmental Protection investigated some of the iron and steel companies in the province last March. The results were staggering. There were environmental concerns at 60% of the companies. Of these, 70% had anti-dust equipment that didn't work, and 80% were guilty of illegally dumping waste water.

Since 2005, China's iron and steel industry has increased its capacity output by thirty million tons. However, only one fifth of the new equipment constructed since then has been inspected and approved.

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