China sets steel overcapacity-cut target by 2020

BEIJING - China will achieve major progress in the steel sector's structural overhaul by 2020 and "fundamentally bail out" the industry, the Ministry of Industry and Information Technology said on Monday.

China plans to reduce crude steel output by 100 million tons to 150 million tons by 2020 and ease the uneven supply-demand situation in the sector, according to the ministry's 2016-2020 plan on upgrading the steel sector.

The whole sector will be modernized and its energy consumption and pollutant emissions will be within the nation standard by 2020, said the plan.

The ministry stressed the central government's resolution to continue to shed unnecessary production capacity in the steel sector, and underscored that it will not allow the addition of new steel capacity and said any investment that would increase steel capacity should stop.

Intelligent and green manufacturing in the steel sector will be encouraged, as well as mergers and acquisitions, according to the plan.

China's over-supplied steel sector experienced years of plunging prices and factory shutdowns due to the sluggish economy. However, with encouragement from the upward trend of prices from the beginning of this year, many steel mills are resuming production.

The central government reiterated that cutting overcapacity is high on its reform agenda as excess capacity in sectors such as steel and coal has weighed on the country's overall economic performance.

China has shut down steel plants with total capacity of over 90 million tons over the past five years.

The National Development and Reform Commission said Friday that the steel industry had completed its annual target of reducing production capacity by 45 million tons by the end of October.