Credit: Shutterstock photoChina is the world's largest producer of steel, accounting for around half of the world's production of the commodity. However, China's steel production comfortably exceeds its domestic demand for the commodity. Chinese steel production continues to remain at elevated levels, despite subdued steel prices and weak domestic demand amid slowing economic growth in the country. We estimate that Chinese steel production exceeded domestic demand by 140 million metric tons in 2016. In other words, excess steel production equates to roughly 21% of domestic demand.
State support in forms such as subsidies and tax breaks has allowed Chinese steel producers to continue producing at elevated levels despite an unfavorable business environment. Excess steel production has driven up Chinese steel exports, which have adversely impacted steel industries worldwide. Chinese steel exports have been characterized by unfair trade practices and regulatory authorities in the U.S. and Europe have imposed antidumping duties on steel imports from China. An increasingly hostile international trade environment could force China to lower its steel production going forward.
Have more questions about ArcelorMittal? See the links below.
- What Is ArcelorMittal's Revenue And EBITDA Breakdown?
- What Is ArcelorMittal's Fundamental Value Based On 2015 Results?
- By What Percentage Did ArcelorMittal's Revenue & EBITDA Change In The Last 4 Years?
- How Has ArcelorMittal's Revenue Composition Changed Over The Last 4 Years?
- By What Percentage Can ArcelorMittal's Revenue & EBITDA Grow In The Next 3 Years?
- How Will ArcelorMittal's Revenue Composition Change by 2020?
- ArcelorMittal: A Look Back At The Year 2015
- With Steel Facing Competition From Aluminum In Automotive Applications, By What Percentage Will ArcelorMittal's Automotive Steel Shipments Change By 2020?
Notes:
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2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for ArcelorMittal
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
