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Surplus output capacity to become severer

www.chinanews.cn 2005-12-26 14:06:35

Chinanews, Beijing, Dec. 26 (By Jia Quanxin) - At present, some sectors
in China are witnessing severer surplus output capacity and oil
demand-supply situation allows no optimism.
It was learned from the conference of centrally-governed enterprises'
chiefs held on Dec. 25 that although the macroeconomic environment is
conducive to the reform and development of centrally-owned enterprises
next year, there are quite a few contradictions and problems in the
current economic operation.
First of all, some sectors will run into more obvious surplus output
capacity. This year, as newly-built steel, construction material and
nonferrous metal projects commenced operation, there has been an
increasing evident contradiction between production capacity release and
demand decrease. Steel prices in the market are heading for stability at
present, but there are many uncertain factors that will affect the steel
market next year.
Influenced by the changes of market demands, the auto industry faced
fiercer competition and prices continued to drop. According to statistics
from the National Development and Reform Commission, the auto industry
has a surplus output capacity of 2 million units at present, with the
capacity under construction reaching 2.2 million units and the planned
output capacity amounting to 8 million units. As a result, the auto
industry will be confronted with severer challenges.
Second, structural contradiction will remain in the supply and demand of
crucial raw materials and energy. In 2006, coal output capacity will
continue to increase while consumer demand will grow at a slower pace.
The tight supply-demand situation will be alleviated on the whole but the
structural contradiction will still exist because of relatively tight
transport capacity of some railway lines. With a batch of projects to
complete and start operation, the tight power supply-demand will be eased
obviously. However, some regions will possibly see oversupply of electric
power, which will become a rigorous challenge for the power industry.
Influenced by factors such as increasing global demand, over speculation
in the market and unstable geopolitical situations, international oil
prices will remain on a high plateau next year. China will find it hard
to reverse the situation of dependence on crude oil import, and the
general oil supply-demand allows no optimism.

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