Chinese iron and steel industry, total debt is expected to reach $ 500 billion
Ernst & Young said in a report today (18) released, said the global steel industry debt has soared to record highs, the total amount of the top 30 largest China Prepainted Galvanized Steel Sheet
company debt amounted to 150 billion US dollars, while China's steel industry debt is expected to reach $ 500 billion.
The report said, the competition for market share, increasing global steel corporate debt, which is particularly evident in China, Chinese companies added 1.075 billion tons of production capacity since 2000, prompting the 700 million tons of excess global steel industry.
It reported weak global economic growth and China's economic restructuring, resulting in the global market as well as Chinese demand for steel fell by 3% and 5.4% respectively in 2015. Therefore steel companies profit continued to decline, worsening cash flow situation, forcing them to support business operations through loans, which led in 2008 to leverage steadily.
Wall Street knowledge previously mentioned, China's steel production accounts for half of the world's excess production capacity is four times the US level of output. The government is vigorously promoting the iron and steel, non-ferrous metals industry, two high and one left to resolve excess capacity. The State Council has proposed to phase-out has been the basis of more than 9000 ten thousand tons of backward steel production capacity, the plan further cuts 2020 100 000 000 -1.5 one hundred million tons of production capacity.
Ernst & Young report said, however, it can not resolve the substantial overcapacity, and with the rest of the world of new capacity added, China's annual 20 million to resolve -3000 tons of production capacity will not solve the problem in the long term.
Late last month, the State Council executive meeting pointed out that to deepen the resolve excess capacity is a priority task of the supply-side structural reforms to ensure the completion of this year to resolve the excess crude steel production capacity of about 45 million tons.
But earlier this month, the People's Daily issued a document that, as of the end of July, the iron and steel industry production capacity to complete the annual task only 47%, overall progress is not satisfactory, progress is uneven between regions.
Subsequently, in an interview with Voice of the economy CNR network, the State Development and Reform Commission Industry Department inspector Shannon said that as the first half of steel production capacity to complete only about 30% of the target, as of the end of July only 47% complete the task, to resolve overcapacity task very difficult, must be accelerated in the second half to ensure the completion of this task.
For corporate debt issues, Shannon said at the time, in the capacity to process, the general idea is to properly resolve the issue through mergers and acquisitions, asset restructuring, bankruptcy and liquidation, etc. ways.