Phenomena that challenged routine practices have emerged in the steel sector on many occasions, which raised further concerns in addition to a drop in profits. While the installed capacity of steel outnumbers the supplies by over 150 million tons, China’s crude steel output saw a year-on-year increase of 0.54 percent in the first five months of this year, compared to a 36 percent fall for the rest of the world, and has become a net steel importer since March. The output has been on the rise since May despite emergency orders issued by the Ministry of Industry and Information Technology to curb production. Moreover, long products which are referred to as “outdated materials” enjoy better sales than high value added flat products.

Calculated at a daily output of 1.45 million tons on average during the first half, China will produce almost 530 million tons of steel in 2009, much greater than the 460 million tons scheduled by the Adjustment and Revitalization Program on the Steel Industry. While steel prices began to rebound from late April, problems remain serious as a result of fast growth of output, sharp decline in exports and higher costs of raw materials.