When Zhou Jiangtao joined Ansteel Heavy Machinery Co Ltd, he expected the lifeof stability and good salary traditionally guaranteed by State-owned companies.
So when the company started laying off workers in late 2015, it took a while for the 38-year-old worker to adjust.
"Factories were barely rolling because there were very few orders for steel products," Zhousaid. "Some of us chose to find new jobs, some just retired in advance."
China's steel enterprises are experiencing severe economic stress as factories haltproduction and workers are laid off.
The Purchasing Managers' Index of the steel industry reached 49 in February, the 22ndmonth it stood below 50, according to the Steel Logistics Professional Committee. A readingabove 50 indicates expansion, while a reading below that level signals contraction.
Sagging demand has already impacted China's steel industry. The State Council, China'sCabinet, announced earlier last month that crude steel production capacity will be slashed by100 million tons to 150 million tons over the next five years.
The situation is so severe that the government predicts some 500,000 workers in the industrywill be laid off.
In Tangshan Songting Iron & Steel Co Ltd (TSIS), one of the country's biggest steel makers innorthern Hebei Province, six huge blast furnaces sit deserted, with only a few workers lookingafter the quiet factories.
The company halted production in November last year, with more than 6,000 workers forcedto stay idle. According to the Futures Daily, TSIS reported 474 million yuan ($73 million) inlosses in the first nine months of 2015.
The company failed to pay 97 million yuan in electric bills, according to an article in theNational Business Daily.
In Hebei's Tangshan city, the heartland of China's steel production, 14 out of 32 local steelmakers reported a debt to assets ratio of at least 70 percent, according to a survey by theTangshan Steel Association in late 2015, higher than the national average of 69.32 percent.
"A lot of steel makers will be wiped out of the market once their capital chains are broken,"said Zhang Pin, a researcher with the Tangsong Steel Economic Research Institute.
Source: China Daily