(Bloomberg) -- Major Chinese steelmakers surged after the country’s main industry association said it would propose specific policies to reshape the sector in the face of falling demand and poor profitability.
Angang Steel Co., China’s second-biggest producer, jumped as much as 17% in Hong Kong, while Maanshan Iron & Steel Co. climbed 24% and Beijing Shougang Co. advanced nearly 9%. A statement from the China Iron & Steel Association fueled speculation of moves to consolidate the sector, which could benefit the big state-owned producers.
“The association has started to accelerate relevant research, conduct special investigations, and propose a package of policy recommendations to promote joint restructuring and improve exit mechanisms,” CISA said in its statement late Friday.
Steel demand is shrinking in China after decades of expansion, plunging the industry into a period of heavy losses and spurring a wave of exports. The nation is still producing about 1 billion tons a year of the metal — over half of global output.
The nation’s property crisis has crushed demand from construction, with little prospect of relief as Beijing aims to clear unfinished homes rather than spur a new wave of buildings. There have been a series of sombre warnings from steelmakers, analysts and CISA on deteriorating market conditions, and the need for another wave of consolidation.
Steel rebar on the Shanghai Futures Exchange rallied 2.8%, while iron ore on the Singapore Exchange was up 2.2% at $103.80 a ton by 1:28 p.m. Shanghai time.
Vicious competition and poor profitability would harm other priorities including technological innovation and environmental protection, CISA said in the statement. It also said that exports — which hit their highest since 2016 this year — were at “severe” risk from protectionist measures around the world.
--With assistance from April Ma and Winnie Zhu.
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