HEADLINE China to launch inspection to prevent low-quality steel, excess capacity


China to launch inspection to prevent low-quality steel, excess capacity


15:49, April 01, 2018


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China will launch an inspection on shoddy steel products and excess steel capacity from May to June, according to the nation's top economic planner.

The inspection aims to prevent steel companies from breaking a ban on low-quality steel made from scrap metal or restoring excess capacity that has been eliminated, said Shui Hengyong, an official with the National Development and Reform Commission (NDRC).

The inspection will be organized by an inter-ministerial mechanism, which has staff from 25 government agencies and industry associations.

China plans to cut ineffective steel capacity by 30 million tonnes this year.

Government efforts will be focused on disposing of "zombie firms" in the industry this year, Shui told a forum on Saturday.

Work will also be done to help redundant workers, dispose debt and speed up restructuring and upgrading, according to the official.

Cutting overcapacity in bloated sectors like steel and coal has been high on the government work agenda in recent years as production gluts ate into corporate profits and dragged economic growth.

With progress in the capacity cuts, steel prices rose last year, leading to improved profits for producers and luring some to resume the eliminated capacity.

In 2016 and 2017, the country reduced more than 120 million tonnes of steel capacity, accounting for 80 percent of the 150 million-tonne cut targeted by the government for the 2016-2020 period, Luo Tiejun, an official with the Ministry of Industry and Information Technology, said at the forum.

The country also phased out the production capacity of 140 million tonnes of low-quality steel made from scrap metal last year. 

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