China's Ministry of Industry and Information Technology has urged the country's steelmakers to cut outputs in the first urgent announcement in the history.
Source from China Iron & Steel Association reveals relevant departments are surveying steel capacity and a blacklist may be released soon.
Mr Shan Shanghua secretary of CISA, has also pointed out a tremendous latent crisis exists in steel production. Forecasts show China's ideal crude steel output should be some 460 million tons. But daily output in Q1 reached 1.416 million tons, equivalent to annual output of 517 million tons. Though total output in Apr dropped 3.7% from Mar to 43.41 million tons, daily output went in line with March. This indicates macro-control policies in steel sector have not worked.
He said that among the total output of 500 million tonnes in last year, 60 million tonnes were exported, but export volume in this year is estimated at 10 million tons, only one sixth of that in last year. He added that blind production expansion and shrinking exports will push up stocks and crisis will burst once fund chains break down.
MIIT will nail down the enterprises and facilities for obsolete capacity elimination and try to fulfil elimination tasks ahead of schedule that local governments have signed with National Development and Reform Commission.
Source from CISA reported that relevant departments are conducting surveys on outdated steel capacity and will announce the detailed enterprises and facilities soon. MIIT will ask commercial banks to halt or reduce loans to steelmakers seeking to boost capacity without considering if there's demand for their products. This is the strictest control measure in steel industry.
The ministry also urged local governments to close obsolete iron-making, steel-making and steel-rolling lines and prevent the outdated capacities reviving.
According to the country's steel revitalization plan, another 72 million tons of obsolete iron making capacity and 25 million tonnes of steel making capacity will be washed out by the end of 2011, on the basis of previous target of 53.4 and 3.2 million tonnes respectively.
NDRC further nailed down the elimination target in this year, including 10 million tonnes of iron-making capacity and 6 million tons of steel-making capacity.
Elimination of obsolete steel capacity has been talked for years, but there is few progresses. The key problem is local interests. Local governments will never give up the big cake given the impetus for high GDP.
(Source: Nanfang Daily)
