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China takes solid steps to cut overcapacity

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China, on Friday took solid steps to eliminate overcapacity since 2016, reducing crude steel capacity by over 150 million tonnes, the Ministry of Industry and Information Technology said.

Overcapacity refers to a situation of excessive capacity for production or services in relation to demand.

Huang Libin, an official with the Ministry of Industry and Information Technology (MIIT), said more than 140 million tonnes of substandard steel output has also been eliminated over the past four years.

“When steel prices rebounded, some mills were lured to recover the production of substandard steel products, which resulted in pollution to the environment, quality and safety hazards.

“The government has resolutely cracked down on the production and sales of substandard steel and maintained a tight grip over steel capacity,” Libin said.

However, over the past few years, China had been able to move its economy from heavy reliance on exports and investment to more homegrown consumer demand, with the steel sector frequently cited as ripe for consolidation.

“In 2020, the government will continue to strengthen inspections over steel mills to cut outdated and substandard production capacity to boost the sector’s healthy development,“ Libin said.

Edited By: Yahaya Isah/Emmanuel Yashim

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