China's biggest steel makers are preparing to cut capacity permanently over the next six months as the nation's slowing economy drags down demand, The Australian Financial Review reports.
The move would come as a new blow to Australian iron ore miners, which were already struggling as the price of the commodity tumbles to $US90 a tonne, approaching three-month lows.
A Chinese steel executive told the AFR his influential state-owned firm would close a blast furnace near China’s east coast to set an example to other producers within the next month.
He also said banks were asking Chinese mills to prove they were profitable before giving them money to finance raw materials shipments.
“It’s definitely getting more difficult, even for big companies like us. We have to show that we’re making money,” the executive said.
Australian miners and other companies linked to the resources boom have held out hope Chinese stimulus measures, including rate cuts, would spur demand in their biggest export market.
However, the Chinese steel mill executive hadn't seen any signs the country's leaders were aiming to ramp up growth quickly to support steel demand, the AFR reported.
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