China Iron and Steel Association (CISA) said major iron and steel enterprises raked in 8.736 billion yuan ($1.31 billion) in the January-May period, up over 700 per cent year-on-year while fewer firms reported losses.
The improvement was a result of the rational response to overcapacity in the sector, as most large iron and steel plants reduced their output in the first five months and tried to stabilise product prices, CISA head Liu Zhenjiang said. Data from National Bureau of Statistics showed total steel production in the first five months dropped 1.4 per cent year-on-year.
The world's largest steel producer plans to cut steel capacity by about 10 per cent — as much as 150 million tonnes of steel - in the next few years, with funds set aside to help redundant workers. Earlier Chinese officials said over 1.8 million jobs were expected to be lost due to overcapacity in coal and steel sectors.
Last month, US Treasury Secretary Jacob Lew asked China to reduce its excess steel capacity. He said the Chinese steel overcapacity was distorting global markets. Lew said the overcapacity could have a "corrosive" impact on the Chinese economy. China has been accused of selling products below market prices.