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August 11, 2016

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Cutting steel overcapacity on track

EFFORTS to reduce China’s steel production overcapacity are forging ahead according to plan, the top economic planner said yesterday.

In a medium-term roundup of the drive, the National Development and Reform Commission said, in an online statement, that the central government has rolled out general guidelines and the NDRC has also strongly guided local governments and major steel producers in drawing their own plans to cut capacity.

The State Council guidelines, issued on February 4, dictated that steel production capacity must be cut by 100 million tonnes to 150 million tonnes over the next five years, with 45 million tonnes cut in 2016.

Xia Nong, head of the NDRC industry department, said that the resolute measures have proven effective, the “People’s Daily” reported yesterday.

The drive will pick up speed in the second half of this year to achieve the goal, he said.

Inspection teams will be dispatched to local governments to oversee their work starting from mid-August, the report said.

Crude steel output posted a year-on-year fall of 1.1 percent in the first half of 2016.

China’s crude steel production capacity utilization rate of 71.2 percent in 2015 was higher than the global average of 69.7 percent, data from the World Steel Association showed.

In the first half year, China slashed steel capacity by 13 million tons, about 30 percent of the planned cuts for 2016, a figure in line with expectations, said Feng Fei, vice minister of industry and information technology.

The campaign gathered pace in July, when another 17 percent of the target was finished.

In the first half year, work focused on breaking down tasks so that they could be allocated to provincial-level regions, and on measures to support steel capacity cuts, Feng said.

In the second half, capacity cuts and supportive measures will gain speed, according to Feng.


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