China intends to punish steelmakers who do not kick out the plan to reduce capacity

The shrinking production capacity will bode well for large and modern steel mills in China, leading to consolidation in a highly fragmented industry. This should also ensure an increase in the capacity utilization factor.

Chinese government officials said the centrally controlled state-owned steel mills will meet the annual capacity reduction targets set for 2016.

The president of China's Metallurgy Planning and Research Institute noted that the penalties announced by the administration should serve as a good warning for many executives who break the rules. “Those who break the rules should be severely punished,” he said. “Such actions will help create a fair market environment and provide a greater impetus for the development of the domestic metallurgical industry in the country,” he added. By the way, in a press release from the National Development and Reform Commission (NDRC) it is said that Chinese metallurgists "have achieved the goal of reducing steel production by 45 million tons in 2016, ahead of schedule."


Meanwhile, Hebei province, a major steel producer, raised its proposed 2017 steel capacity cut target from the previous 15.62 million tonnes to 19.86 million tonnes for the year. Tightening environmental regulations and measures against illegal producers could also help the country achieve planned capacity cuts in 2017.