China releases new steel capacity replacement policy

steel capacity

The Ministry of Industry and Information Technology (MIIT) announced Monday a new policy to ensure zero growth of steel capacity in 2018.

The new policy forbids plants from increasing capacity.

In environmentally sensitive areas of the Beijing-Tianjin-Hebei region, the Yangtze River Delta and the Pearl River Delta, steel plants should remove at least 1.25 tonnes of outdated capacity for every 1 tonne of new capacity.

The new rules are a sign China will continue to deepen its efforts to push supply-side reform and reduce overcapacity in the sector. China is aiming to cut steel capacity by 100 million to 150 million tonnes over the 2016-2020 period, the country’s State Council said in early 2016 as part of a five-year plan.

The new guidelines include clearer details on closing capacities to build new plants, based on the size of blast furnace, converters and other facilities to be shut down.

Steelmakers that plan to build new capacities will have to shut a certain number of existing ones first, according to the statement. Mills that have closed illegal capacities or obtained financial and policy assistance to help shut plants will not be allowed to build new ones.

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