With arrival of fresh stimulus and banking loans, Steel industry in China has once again started firing its all engines, threatening to worsen, one of the worst global supply glut ever. China alone produces about 900 million tons of steel annually or just a bit more than half of global production. It is also the biggest consumer of steel. However, recent drop in demand within the country has led to a supply glut, where cheap Chinese steel has been hitting global markets, threatening different countries’ domestic production.

Some countries like India, has already taken up measures to prevent China’s steel dumping into its market, however many in the developed market until now, has been reluctant to take measures. The announcement of TATA to close down its UK operation has somewhat shaken global leaders and threat of Chinese steel became more visible than ever. TATA closed UK’s largest operation citing cheaper steel dumping from China.

This week, U.S. has adopted a more stringent measure to protect its own producers. U.S. department of commerce has announced that it has determined that an anti-subsidy duty of 256.4% and an anti-dumping duty of 265.8% would be appropriate for Chinese cold rolled steel.

Despite the stimulus and increase in construction activity, Chinese Steel surplus over next one year, likely to be 150-200 million tons, which is around 10% of global production in 2015.

With governments, outside China, determined to tackle dumping, China will face difficulty finding major buyers outside the country. Unless reforms push the production capacity down, expect more turmoil in the sector and defaults over the coming years.

Notable after rising 85% since December to April, Steel prices has shed more than quarter of their value.