According to Mr Xiong Bilin inspector with Industrial Coordination Division of Chinese National Development and Reform Commission, there are 58 million tonnes of unauthorized capacity under construction in Chinese steel industry accounting for 30% of the current excessive capacity.
He said that "This redundant part should be eliminated without exception based on the State Council."
A source with CISA, told the paper that the unapproved capacity which has been built up or under construction possibly outreach the mentioned 58 million tonnes.
According to the data issued by related department of the NDRC, the steel capacity in China has reached 660 million tonnes sharply compared with the practical market demand of 470 million tonnes.
Early in this August Mr Li Yizhong Chief of the Ministry of Industry and Information Technology disclosed at a news conference that there are 100 million tonnes of redundant capacity in iron making and 50 million tonnes in steel making. He said that "Containing the 58 million tonnes of unauthorized capacity the actual capacity need washing out amounts to 208 million tonnes in the sector."
China steel industry is rapidly expanding especially in the couple years. Among the newly launched capacity expanding projects, quite a number have started building or coming on stream before being approved by NDRC and related authorities.
Mr Xu Xiangchun of Mysteel said medium and small mills should be accountable for the bulk of the 58 million tonnes. That is because large scaled mills won't risk government policies to do so. But small and medium mills care much the significant albeit mall projects of possibly only several million tonnes and local governments generally leave them alone in view of their contribution to the employment and financial revenue.
Mr Xu said that the government policies possibly adopted to eliminate the backward capacity contain upgrading the access standards in energy consumption, environmental conservation and industrial codes. But insiders hold skeptical attitude towards the effectiveness. Previous attempts have proved to be futile. Because those already built plants in particular, albeit small scaled, possibly play a backbone role in local economy, local government will not break them down of their own accord.
In early 2007, the NDRC mandated major steel mills and some local governments to sign a liability statement about eliminating obsolete steel capacity in due time, but only half of the target has been achieved across the country.
(Sourced from MySteel.net)
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