NDRC: China still firm on removing excess capacity in ‘20
The June 18 notice reiterated that the work, which mainly covers the three key industries of steel, coal and thermal power, needs to continue to be firmly implemented in 2020. The scope of the campaign includes capacity reduction, the elimination of “zombie enterprises”, relocation of employees in affected companies, and optimization of industrial structure to control capacity. The NDRC statement sent a clear message to these industries that work to implement these objectives and the Commission’s supervision of progress will not be relaxed, Mysteel Global notes.
In an attached document specifically targeting the country’s steel industry, NDRC stressed that all regions in China should accomplish their respective goals of steel capacity cuts this year.
China removed a total of 155 million tonnes/year of steel capacity over 2016-2018, fulfilling its goal of cutting 100-150 million t/y by 2020 two years ahead of schedule. However, certain regions have yet to meet their own targets, Mysteel Global understands.
For example, North China’s Hebei, China’s largest steel producing province, still needs to cut another 14 million t/y of steel capacity within this year, in order to fulfill its goal of removing a total of 40 million t/y over 2018-2020, as Mysteel Global reported.
NDRC reemphasized that while continuing to cut capacity and safeguard the successes that have been achieved in this area, adding new steel capacity is strictly forbidden. All projects concerning scrapping old facilities to swap for new capacity will be carried out strictly in compliance with Beijing’s old-for-new capacity swap policy – with every step of the process being documented, publicized and strictly monitored by both governing bodies and the public.
NDRC pointed out the importance of maintaining the stability of both steel and iron ore markets. The Commission would coordinate and support related domestic associations and enterprises to negotiate with international iron ore suppliers, finding a more scientific way for pricing iron ore. It asked that any illegal action or monopoly on iron ore pricing be made public so that such behaviours could be punished.
In the six-page document, NDRC also reemphasized that China’s steel industry should continue to improve industry concentration through merges and acquisitions and continue to promote electric-arc furnace steelmaking, Mysteel Global notes. No specific targets or deadlines were mentioned in the document for realising these particular aims, however.
Written by Olivia Zhang, zhangwd@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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