Beijing warns domestic metallurgists of "attacks" on overproduction

China's steel mills need to prepare for even tougher government overproduction measures this year to make "fundamental" progress in sector reform.

“Although the capacity reduction targets were met last year, the problem of overcapacity in China's iron and steel sector has not fundamentally been improved,” said a spokesman for the National Industrial Development and Reform Commission (NDRC) department.

The government has billed 2017 as the "year of attack" and plans to make even greater efforts to reduce overproduction, warning officials and industry leaders in Beijing to plan ahead.

The world's leading steelmaker last year promised to cut its annual steel capacity by 100-150 million tonnes over three to five years. China is aiming to shut down 50 million tonnes of capacity this year, and by the end of June has pledged to completely eliminate low-grade kilns that produce as much as 100 million tonnes of illegal substandard products annually.

Environmental group Greenpeace estimates that actual capacity in operation increased by 35 million tonnes in 2016, with much of the closure program focusing on defunct facilities.

China's steel production rose 1.2 percent to 808.4 million tonnes in 2016, and Greenpeace said the country needs to consider cutting production rather than being able to curb overproduction in the sector.