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China forbids steel mills from increasing capacities in 2018


China’s Ministry of Industry and Information Technology (MIIT) announced 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region, the Yangtze River Delta and the Pearl River Delta, steel plants should remove at least 1.25 tonnes of outdated capacity for every 1 tonne of new capacity.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 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.. Mills that have closed illegal capacities or obtained financial and policy assistance to help shut plants will not be allowed to build new ones.

The move has underscored China’s determination to ban growth in its massive steel sector and turned steel prices to positive from negative as investors expected China’s steel capacity will continue falling this year.

Source : Xinhua