China intends to solve the overcapacity in the steel industry by 2017

China will accelerate the reorganization of its iron and steel sector to bring it back to a „balanced level” by 2017, a representative of the Ministry of Industry said.

The Ministry of Industry and Information Technology (MIIT) stated that it aims to bring the rate of profit in the industrial environment and the return on assets to a reasonable level, with production capacity used more than 80 percent, in accordance with the published industrial policy project Friday (March 20).

This is the latest government action to deal with overcapacity. And it has affected China since the 2008 financial crisis.

The reorganization of China’s iron and steel sector

China produced 823 million tons of crude steel last year, accounting for over 50 percent of the world’s total output.

The proposed project intends to accelerate the merger and acquisition process. To create between three and five large steel producers by 2025. And it will be ensured that the 10 largest companies will consume no less than 60 percent of the total production.

The ministry also intends to perfect the market access and exit rules to dissolve excessive production.

The project emphasizes that factories must comply with national standards regarding polluting emissions and energy consumption, with the aim that all solid waste be recycled by 2025.

MIIT will also help establish more research centers, laboratories and industrial associations. To encourage innovation in the steel sector.

China has started asking for advice on energy conservation. Also, reducing emissions, market access and environmental protection to help it achieve its goals.

The steel production sector is overcapacity

The government had difficulties to assimilate the excess production in the „favored” sectors. Including the steel industry, caused by the rapid expansion without taking into account the real demand on the market. The overcapacity sector is going through hard times right now. It has many small steel producers declaring bankruptcy, and some of the big producers struggling to survive.

As demand continued to shrink and signs of overcapacity became more apparent, the government promised to cut production by 80 million tons by 2017, roughly equal to the annual output of the U.S., the world’s third-largest steel producer world. In 2014, 31.1 million tons were eliminated.

Article source: http://www.globalpost.com/dispatch/news/xinhua-news-agency/150322/china-focus-china-plans-resolve-steel-industry-overcapacity-

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