Given the recent decline in steelmakers' operating run rates, around 250 million mt/year of capacity needs to exit the market to get back to utilization of 85%, Macquarie Research said in a note Wednesday.
This outstrips the 170 million mt of closures Macquarie previously said would be needed to reach the same rate.
Macquarie said global utilization has fallen to around 72%, a new post-global financial crisis low, meaning mills can have no pricing power, and explaining the "dire margins" afflicting the industry.
Given the well-publicized steel and iron-making overcapacity, Macquarie said there has been keen interest in China's announced "supply-side reforms" -- the country said it would cut 100 million-150 million over an undefined period of time.
However, the bank said capacity cuts have so far been minimal in China, around 20 million mt/year, so the announced closures could take "a matter of years to implement."
