SHANGHAI, Dec. 21 (SMM) – China’s iron and steel capacity has been growing steadily during recent years, with the total crude steel capacity breaking through 800 million mt/yr. As 2012 nears, many more blast furnaces are expected to be added, mainly for medium to long profiles and cold-rolled products. China’s iron and steel industry therefore will see lasting pressure from its huge capacity.

China added 63 blast furnaces in 2011, which have a total iron making capacity of 85.59 million mt/yr. Most of these furnaces were added in the Tangshan region of North China. According to preliminary statistics of Steelease, 32 blast furnaces are planned to be added in 2012, which have a total iron making capacity of 48.16 million mt/yr. Taking into consideration eliminated inefficient capacities, China’s total crude steel capacity is expected to reach around 870 million mt/yr by the end of 2012. Further more, China’s net added iron making capacity still rose by over 100 million mt during recent two years. Even China eliminates all blast furnaces smaller than 400 m3 in 2012, China’s crude steel capacity will stay near 800 million mt/yr.

For blast furnaces that have been added during recent two years, only 5 has an effective volume higher than 3,000 m3, which accounts for only 6.5% of the added total. That compared with 74% of blast furnaces with an effective volume between 1,000-2,000 m3. This indicates that rapid development of large Chinese steel mills has ended and medium and small steelmakers have become major drivers of China’s steel capacity expansion.

On the product category side, high growth was seen mainly in two kinds of products: long profiles and cold rolled products.

China’s crude steel output is expected to hit a new record in 2012 as capacity stays large. Remarkable capacity growth is seen mainly in rebar, wire and cold rolled products, which will cause more pressure for these sectors due to excessive supply. Meanwhile, as property curb continues in China, market demand for construction steel products is expected to decline.