It is reported that Shanxi Economics and Information Committee made a detailed plan to adjust and revitalize its steel industry, which is an important tax payer and job supplier in the province.

Local business newspaper reported the province cap pig iron and crude steel outputs at 45 million tonne and 40 million tonne respectively by 2011.

The Committee said that by 2008, Shanxi has about 78 above designated scale steelmakers, posting sales income of CNY 165.2 billion which have pig iron capacity of 54 million tonne output of 27.82mt; crude steel capacity of 40 million tonne, output of 23.45 million tonne and steel product capacity of 26 million tonne output of 19.76 million tonne.

Next step, the province will move on to expand stainless capacity and quicken development of the product varieties, on the basis of Taigang’s existing stainless capacity. An international stainless production base is targeted to be made. On the meantime, the province purposes to make merger, acquisition, elimination, and upgrading to forge steel bases in Changzhi, Yuncheng, Linfen and Lvliang. It already has big steel complex such as Haixin Steel, Zhongyang Steel, Zhongyu Steel and Changzhi Steel in these places.

By promoting Taigang to take over Antai Steel and other smaller mills, the plan hopes to raise its capacity up to 70% of the province’s total.

It is said that General Steel Holdings Inc. fell in New York trading after the Beijing-based steelmaker would raise about $25 million in a sale of shares and warrants.

General Steel dropped $1.22, or 21 percent, to $4.57 at 1:05 p.m. in New York Stock Exchange trading. The shares have risen 16 percent this year.

The company earlier today announced plans to sell 5.56 million shares and warrants to purchase as many as 2.78 million additional shares. The funds will be used for “general corporate purposes which may include working capital, capital expenditures, acquisitions of new businesses and investments.”

General Steel said in a statement April 8 it was starting discussions with a “potential target.” The company’s goal is to become a major steel producer in China, Amit Dayal, a New- York based analyst with Rodman & Renshaw Inc., said in an April interview.

It is reported that Wuhan Iron & Steel Group, China’s third-biggest steelmaker, plans to boost output by 24 percent next year as demand recovers from 2009, which it said was the toughest year in the company’s history.

Wuhan Steel expects to produce 37.9 million metric tons of crude steel in 2010, up from a forecast 30.5 million tons this year, it said in a statement on its Web site today. The group aims to earn 150 billion yuan ($22 billion) in revenue next year, it said.

China’s $586 billion stimulus spending has boosted steel demand from automakers, home-appliance manufacturers and builders. The measure helped domestic steelmakers return to profit in May after seven straight months of losses because of the global economic crisis.

This “has been the most difficult year in our history,” Wuhan Steel said. “The economy is improving, but there isn’t a fundamental turnaround. We should grasp the opportunity to overcome the impact of the crisis.”Wuhan Steel’s listed unit gained 0.1 percent to 7.86 yuan as of 11:21 a.m. local time in Shanghai trading, compared with a 0.3 percent decline in the benchmark Shanghai Composite Index.

China’s steel output may exceed 600 million tons next year, after reaching a record 570 million tons this year, the China Securities Journal reported Dec. 17, citing Ma Guoqiang, general manager of Baoshan Iron & Steel Co., the listed unit of the nation’s largest steelmaker.

Rising steel demand and prices in China, the largest producer of the alloy, led analysts to predict higher prices of raw material iron ore and coking coal next year. Macquarie Securities Group forecast a 30 percent gain in iron ore prices and Citigroup Inc. predicted domestic coal prices in China may rise 14 percent.

Still, a severe steel oversupply in China has overwhelmed demand, leading to high inventories, Wuhan Steel Group’s general manager Deng Qilin said Oct. 14. China is studying a “more feasible” plan to tackle steel overcapacity, the Ministry of Industry and Information Technology said this month.

It was said from the statement that Wuhan Steel also will progress with its 10 million ton steel project in the southern province of Guangxi and a plan to build a steel plant in Brazil.

According to figures from industry consultancy Mysteel, China’s daily crude steel output reached 1.646 million tonnes in the first 10 days of December, down 1.5 percent from the end of November.

While daily output has slowed slightly amid a seasonal lull in end-user demand, the figure remains much higher than the January-November average of 1.55 million tonnes, with mills and steel traders building stocks before a series of price hikes in January.

Total output from January to November reached 518.177 million tonnes, up 12.1 percent compared with the same period last year.

It is said from industry insiders that iron ore spot prices reached a record high this week, triggered by moves from global mining firms to enhance their position in ongoing negotiations.

“The fact that traders are stockpiling steel on the prediction that steel prices will rise next year caused the market to soar,” said a sales manager at Beijing Ye-Steel Trading Co.

China’s steel stocks hit 12.18 million tons last week, up 109 percent from the same period last year and up 2.88 percent compared to last month, according to Mysteel.com.

“Even in the slack winter season, steel traders are storing stocks because they foresee an improving market next year,” the sales manager said.

China’s largest steel mill Baosteel and Anshan Steel announced plans to raise delivery prices of steel products for next month by 100 yuan to 600 yuan per ton.

Analysts said the price hike could put domestic steelmakers in a disadvantaged position in iron ore talks as raising steel prices provides more room for miners to hike prices.

The rising spot price of iron ore also put pressure on the benchmark price for the material.

The spot price for ore with a 63 percent iron content soared to $115 per ton including freight yesterday, up by $10 per ton over three weeks ago and more than 50 percent higher than the benchmark for fiscal 2009 reached by Rio Tinto, BHP Billiton, and Vale with Asia steelmakers.

Traditionally, annual contracts are settled below spot market prices. Last year’s benchmark contract for iron ore was $60.4 a ton, excluding freight charges.

Investment banks this week have altered their forecasts for 2010-11 contracts, saying annual iron ore prices could rise by up to 30 percent, up from an expected a 10 percent increase.

The annual negotiation between miners and Chinese steelmakers are likely to start in late December. Both parties aim to finish the talks before April 1.

This year’s iron ore price talks have been deadlocked since June when China’s chief negotiator, China Iron and Steel Association insisted on a 45 percent discount over the last year’s prices, after a 33 percent cut in benchmark prices had been reached by the three global miners with Japanese and South Korean steel mills.

Steel prices are anticipated to a big rise in the coming year – 2010, most iron ore producers are hiking their prices in China.

As an indicator for the steel market, the Baosteel Group Corporation (Baosteel) has raised January 2010 iron ore prices.

After the price adjustment, the main product prices of Baosteel have basically returned to their high level in 2009. The action was followed by Wuhan Iron and Steel (Group) Corp. (WISCO), Anshan Iron and Steel Group and other enterprises increasing their steel prices.

However, India witnessed another phenomenon this week when JSW Steel, India’s third largest maker of steel, has cut prices for flat products by Rs 500 a tonne in December.

Flat products are used in manufacture of automobiles and consumer goods such as refrigerators and washing machines. JSW has said it sees steel prices to be stable with an upward bias in 2010Baosteel said next year in terms of steel demand and the overall price, the situation will be greatly improved compared to this year, but the overcapacity issue will remain.

Next year’s domestic production capacity of the company may surpass 600 million tonnes. The company expects that next year China’s economic growth will rely more on domestic demand and growth in investment will be less than this year. Based on this premise, combined with reduction in vehicle purchasing tax and the possibility of continuing the home appliances to the countryside policy, the outlook for steel demand is optimistic.

Furthermore, as urbanization continues to advance, the demand for steel will be diversified, which will generate a new round of domestic steel demand. Relatively speaking, with the cooling down in investment in infrastructure, construction steel demand growth will slow in 2010.

According to Minister of industry and information technology–Li Yizhong, China, as the world’s top steelmaker, closed 16.9 million metric tons of obsolete capacity this year as part of an effort to ease domestic oversupply, .

The nation also shuttered 21.1 million tons of iron-making capacity; 800,000 tons of aluminum capacity; and 74 million tons of cement capacity, Li said today at a conference in remarks broadcast on the Internet. The figures beat targets set by the Ministry of Environmental Protection earlier this year.

China, also the world’s biggest producer of iron, cement and aluminum, is facing a severe oversupply of steel as mills expand faster than outdated plants are closed. The government is studying a “more feasible” plan to tackle steel overcapacity, Li’s ministry said on Dec. 3.

“The 2 percent cut in capacity by the Chinese steel industry is truly a spit in the ocean,” Michelle Applebaum, who runs a steel-research firm in Highland Park, Illinois, wrote in an e-mail. “Many of the country’s high-cost and polluting, older provincial mills continue to run for jobs rather than profitability,” said the analyst at Michelle Applebaum Research.

Steel capacity in China may have reached 700 million tons or more, Xiong Bilin, deputy director at the National Development and Reform Commission’s industry department, said on Dec. 3. The nation may need 549 million tons of the alloy this year, the China Iron and Steel Association said in November.

“Investment has risen too fast in some industries in recent years,” Minister Li said today in the Web cast. “There are blind expansions in steel and cement. A large amount of obsolete capacity needs to be closed.”

China had planned to shut 6 million tons of steel-making capacity and 10 million tons of iron-making capacity this year, the Ministry of Environmental Protection said on Jan. 13. The Ministry of Environmental Protection said on Nov. 13 that the government is planning measures to close plants in the steel, aluminum, coke, cement, paper and utility industries.

It is reported from China Securities Journal on Wednesday that China Ministry of Industry and Information Technology (MIIT) is planning to modify the detail policies for eliminating obsolete and inefficient production capacity of the steel industry.

Unveiled on 20 March, the Plan for Reinvigorating the Steel Industry is a document to guide the adjustment of the industry structure and eliminate obsolete and inefficient production capacity, which stated clearly that high furnaces of 300 cubic meters and below, revolving furnaces and electric furnaces of 30 tons and below have to be eliminated by the end of 2010, and high furnaces of 400 cubic meters and below should be eliminated by the end of 2011.

However, Liu Yongchang, director of the Steel Department under the former Ministry of Metallurgical Industry, told China Securities that the enforcing standard of eliminating high furnaces of 400 cubic meters and below is unreasonable to plants that produce long steel  products.

Earlier, Liu and three other department directors of the former Ministry of Metallurgical Industry have submitted suggestions to MIIT, stating that the elimination standards should be adjusted according to enterprises’ actual situations.

MIIT responded to the suggestion proactively, by setting specific research subject on that issue and conducting research in steel mills including large plants and small and midsize ones. The research was completed on 20 September, said an insider with MIIT.

The insider also told China Securities Journal that MIIT would guide enterprises to eliminate the inefficient production capacity in accordance with their own development situation, instead of enforcing the previous stiff standards.

It is reported that steel prices in China have dropped for six weeks running weighed by high stocks, but the decline was small thanks to the support from the recovering economy.

Market analysts hold that as the economy is growing steadily after a period of rapid revival. The steel industry will not go through sharp ups and downs, but is likely to enter a correction stage.

By last week, domestic steel prices had dipped for six straight weeks. However, the decline in the past three weeks has been narrowing, with rebar prices only edging down 10 yuan/ton a week on average.

Analysis of the industry information provider MySteel.com said that the building steel prices went down about 50 yuan/ton at most last week, with the decline smaller than the previous week.

However, a total of 13 rebar enterprises and 15 wire rod firms adjusted their prices last week, which indicates that the steel market has not yet stabilized.

Medium steel plate prices have been dropping but will post a smaller decline in the immediate future. The prices of hot-rolled and cold-rolled steel products will continue to correct.

According to a survey on the domestic steel mills and traders, more than a half held that the steel market would be dominated by correction in the coming period.

The Shanghai building steel market recorded an increase in stocks by 10 weeks running. A report by the China Iron and Steel Association said that in August, the steel stocks in the country’s major markets increased more than 15 percent over the previous month, and hit the second highest point of the year.

However, increasing steel demand from construction projects and restocking before the coming weeklong holiday have lent some support to the steel market.

Wang Jianhua, an analyst with MySteel, noted that the high stocks and a stable demand would exert a combined effect on the steel market.

Meanwhile, although steel prices have been falling persistently, steel plants are still unwilling to cut output as they can still make moderate profits at the current prices.

In the first 10 days of September, China’s crude steel output was estimated to be about 16.66 million tons. Daily output was about 1.66 million tons, down only 20,000 tons from last month.