China to cut steel production by up to 150m tons

Will Green is news editor of Supply Management
18 February 2016

The Chinese government has announced it will cut steel production by millions of tons over the next five years in response to overcapacity in the sector.

The State Council said production would drop by between 100m tons and 150m tons a year, “with the aim of facilitating the merger and reorganisation of steel plants, optimising industrial structure and helping enterprises gain profits”.

The Sinosteel headquarters in Beijing, China © Press Association Images

“With downward pressure and contracted market need for steel and iron in recent years, problems concerning production overcapacity surged, and deficits of some enterprises have been increasing,” said the government in a statement.

According to the World Steel Association China produced 823m tons of steel in 2014.

Measures announced by the government include “prohibiting any regions or departments for approving new steel projects”, while steel enterprises that “cannot meet certain standards should be guided to drop out of the market according to laws or through incentive policies”.

“Local authorities are required to promote intelligent manufacturing and high-end quality products to facilitate an industrial upgrade,” said the statement.

The State Council has also announced that coal production will be cut by 500m tons in the next “three to five years” and “outdated” mines will be shut down.

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