China to ban new steel production facilities in 2018

China, the world's largest steel producer, has pledged to continue its efforts to reduce steel volumes. In a statement released Thursday by the Ministry of Industry and Information Technology (MIIT), the country's administration reaffirmed its commitment to curbing excess steel capacity.

MIIT said in a statement that the country will strictly prohibit the launch of new steel facilities in 2018. It will also ensure the disposal of all obsolete steel facilities. In addition, such facilities will not be reopened. This will help the country achieve its capacity reduction targets.

The ministry also noted that it will encourage steel producers to use electric arc furnace (EAF) technology. It should be noted that EAFs emit much less contamination compared to steelmaking facilities using traditional blast furnaces. In addition, these facilities use recycled steel scrap instead of iron ore as a raw material for steel production. It should be noted that the country has been making efforts to increase collection of domestic scrap metal over the past few months. The new move is expected to increase domestic demand for scrap metal, which will be sourced locally.