The Chinese steel industry faced severe overcapacity in the January-June period, an official with the Ministry of Industry and Information Technology revealed yesterday.
Zhu Hongren, the MIIT's chief engineer, said the output of crude steel stood at 390 million tons, up 7.4 percent year on year, with an average daily production of 2.15 million tons.
However, steel price kept declining so that the price index compiled by the China Iron and Steel Association fell 3.3 percent month on month to 98.5 points by the end of June, and down 14.7 percent from a year ago.
But the price of iron ore dropped much slower than the price of steel.
In June, iron ore price dipped slightly, by 0.3 percent, from the beginning of 2013, equating to a drop of about 30 yuan (US$4.86) per ton, while the average steel price declined about 280 yuan per ton, Zhu said.
The CISA's data also showed the rising risks of insufficient capital in the sector.
From January to May, the debt-to-asset ratio of key Chinese steel companies stood at 69.4 percent, reflecting financing difficulty.