New China - 70 Years On: Iron & steel industry faces challenges of building stable market

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Now we continue our exclusive series "New China" to celebrate the 70th anniversary of the People's Republic. In this edition, we look at the iron and steel industry. China built its first iron and steel plant in the 1950s, and after nearly 70 years, the industry is entering a new chapter. CGTN's Ning Hong has more.

China's iron and steel industry has been seeing a revival, especially over the past 3 years. Back in 2016, China produced more than 800 million tons of steel, almost half the volume of global production. Yet, most iron and steel companies were losing money.

LI XINCHUANG, DIRECTOR CHINA METALLURGICAL INDUSTRY PLANNING AND RESEARCH INSTITUTE "There is a serious overcapacity in steel, and the overall pattern of oversupply and supply of our production is difficult to change in the near future."

China started its supply chain reform that same year and the excess production capacity of iron and steel was the first target. During the following four years, China cut 150 million tons of steel production capacity. This came after a massive closing and merging of iron and steel plants.

In Northern China's Hebei Province, the country's largest steel producing region, nearly 60 percent of iron and steel companies were shut down or merged. The remaining ones are undergoing a hard transition. HBIS is the largest company in the region.

LI YIREN PRESIDENT OF STRATEGY INSTITUTE, HBIS GROUP CO., LTD. "In the past ten years, we've focused on high-end customers and have been upgrading our products and services. This is also an adjustment to meet the requirements for iron and steel material as industrialization continues to develop in China."

Iron and steel companies are investing more on new technology and overseas mergers. The latest report from the China Steel Association shows that the latest trend for the sector is adopting intelligent manufacturing, mainly to meet concerns of fluctuating demand in the market.

Statistics from the National Development and Reform Commission show that profits for the sector dropped over 20 percent in the first half of 2019. A smooth road to a stable iron and steel market is a far way off. Ning Hong, CGTN, Beijing.