China cuts 13 million tonnes of steel capacity in first half, less than third of FY goal

26 July 2016

China cut 13 million tonnes of excess crude steel capacity in the first half of the year, less than a third of its annual target, but will step up efforts in the second half, the vice industry minister said on Monday.

Feng Fei, regarded as the architect of China's plans to curb profit-sapping capacity gluts in both steel and coal, said during a press briefing in Beijing that he remained confident China would reach its target of 45 million tonnes for 2016.

Feng said the work in the first six months focused on dividing the overall target throughout China, and 28 provinces and regions had already submitted their capacity reduction plans to the country's cabinet, the State Council.

"Overall, the focus of our work in the first half was mission planning, and in the second half we will step up the implementation and enter a new stage, from allocating targets and drawing policies to actually pushing capacity cuts," he said.

China had originally targeted overall steel capacity cuts of 100 million to 150 million tonnes by 2020, but Feng said the total reduction over the next five years was expected to hit 140 million tonnes.

According to official figures published by the industry ministry earlier this year, China's total steel capacity stands at 1.13 billion tonnes, much higher than last year's output of 804 million tonnes.

China has been raising pollution standards to help force older steel mills to close, and the environment ministry announced on Monday that it would launch a nationwide inspection into the industry to see if it was complying with the rules.

China also aims to cut coal output by 500 million tonnes in the coming three to five years, and will close as much as 280 million tonnes of capacity this year alone, the country's top economic planner said in late June.

Feng said more policy support would be required to keep China's economic growth stable, with the country's industrial economy still facing many uncertainties in the second half of this year.


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