Hebei, the northern province in China, plans to shut down 60 percentage of steel mills by 2020, which will lose 180 billion yuan in revenue. This is part of the efforts to trim overcapacity. Small mills with production capacity of less than 300,000 tons per year will be the first to be banned.

One of the main reason of this decapactiy and deinventory is air pollution.Residents in Hebei and Tianjin were choked by several bouts of severe air pollution in November, December and in early March. It is said that burning coal is main course of the smog.

SteelHome China Steel Price Index (SHCNSI)[2016-03-18]

Index Week on week% Month on month% Quarter on quarter% Year on year%
Steel Index (SHCNSI) 60.32 2609 -3.37 12.68 5.52 -20.09
Long Products (SHCNSI-L) 65.15 2368 -4.32 13.13 2.49 -19
Flat Products (SHCNSI-F) 56.04 2636 -3.99 14.75 10.84 -19.99
Special Steel (SHCNSI-S) 65.37 2633 0.43 8.33 1.91 -21.27
Stainless Steel (SHCNSI-SS) 51.25 11232 0.33 2.62 -4.61 -25.95
Wire Rod (SHCNSI-WR) 64.61 2390 -4.19 12.89 3.25 -17.78
Rebar (SHCNSI-RB) 65.89 2331 -4.86 13.59 2.71 -19.08
Section Bar (SHCNSI-SB) 64.97 2454 -2.91 12.12 0.48 -20.76
Medium Plate (SHCNSI-MP) 55.8 2606 -4.77 19.21 9.35 -18.85
HR Coil (SHCNSI-HR) 53.73 2483 -5.29 15.06 10.87 -20.8
CR Coil (SHCNSI-CR) 53.53 3253 -0.33 12.17 12.85 -22.23
Quality Wire (SHCNSI-QW) 62.45 2480 1.35 10.18 -0.38 -22.85
Carbon & Alloy Structural Steel (SHCNSI-CA) 62.87 2452 -0.19 10.06 1.91 -23.99
Seamless Pipe (SHCNSI-SP) 50.49 2841 0.45 5.81 -4.62 -24.28

As we can see from the above table, generally the steel price has been increased within 3 months. Let’s wait and see what will happen in next quarter.

YT components, as the experienced supplier for rolled ring forging, CNC machining, and heat treatment, has a sound system for raw material management. We are running color management to prevent the steel mix. Incoming inspection like component check is implemented to ensure the steel quality.